An Evolutionary Bargaining Model

Murali Agastya

Game Theory and Information from University Library of Munich, Germany

Abstract: Varying quantities of a single good can be produced using at least two and at most $n$ factors of production. The problem of allocating the surplus among the factors is studied in a dynamic model with adaptive behavior. Representatives for the factors (called players) make wage demands based on precedent and ignorant of each other's utilities for this good. Necessary and sufficient conditions are provided under which the long-run equilibria coincide with the core allocations. A global convergence result is proved to show that players do learn to reach a core allocation in the long run. Moreover, allowing for the possibility of mistakes by the players, all the {\em stochastically stable outcomes} are characterized. The main result shows that in the limit, these stable allocations for a particular set of players converges to the allocation that maximizes the product of all the players' utilities over all core allocations.

JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 1995-03-09
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