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Unique inefficient perfect equilibrium in a stochastic model of bargaining with . . . (2001)
| Citations: | 3 - 0 self |
BibTeX
@MISC{Furusawa01uniqueinefficient,
author = {Taiji Furusawa and Quan Wen},
title = {Unique inefficient perfect equilibrium in a stochastic model of bargaining with . . . },
year = {2001}
}
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Abstract
We consider a two-player strategic bargaining model with discounting in which (i) the interim disagreement point in each period is stochastically determined at the beginning of the period, and (ii) the proposing player can delay in making an offer. Unlike many other bargaining models of complete information, in which ine±cient perfect equilibrium outcomes are caused by the multiplicity of perfect equilibria, our model has a unique perfect equilibrium payoff in most of the cases. For some parameter values, the perfect equilibrium is ine±cient since it has a stochastically delayed agreement. We show that both (i) and (ii) are also necessary for the unique ine±cient equilibrium outcome in our model.
