Finite Horizon Bargaining and the Consistent Field |
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| Authors: | Armando Gomes Sergiu Hart Andreu Mas-Colell |
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| Affiliation: | a Department of Finance, The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania;b Department of Economics, Department of Mathematics, Center for Rationality and Interactive Decision Theory, The Hebrew University of Jerusalem, Israel;c Department of Economics, Universitat Pompeu Fabra, Barcelona, Spain |
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| Abstract: | We explore the relationships between noncooperative bargaining games and the consistent value for nontransferable utility (NTU) cooperative games. A dynamic approach to the consistent value is introduced: the consistent vector field. The main contribution is to establish that theconsistent fieldis intimately related to the concept ofsubgame perfectionfor finite horizon noncooperative bargaining games, as the horizon goes to infinity and the cost of delay goes to zero. We then show that in the general NTU case—unlike the transferable utility and pure bargaining cases—the finite horizon subgame perfect equilibria need not approach the consistent value.Journal of Economic LiteratureClassification Numbers: C71, C72. |
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