Markov Equilibria in a Model of Bargaining in Networks

Dilip Abreu and Mihai Manea
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Dilip Abreu: Princeton University

No 1359, Working Papers from Princeton University, Department of Economics, Econometric Research Program.

Abstract: We study the Markov perfect equilibria (MPEs) of an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain. Players who reach agreement are removed from the network without replacement. We establish the existence of MPEs and show that MPE payoffs are not necessarily unique. A method for constructing pure strategy MPEs for high discount factors is developed. For some networks, we find that all MPEs are asymptotically inefficient as players become patient.

JEL-codes: C01 C70 (search for similar items in EconPapers)
Date: 2011-09
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Citations: View citations in EconPapers (2)

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Journal Article: Markov equilibria in a model of bargaining in networks (2012)
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