On Vind’s theorem for an economy with atoms and infinitely many commodities

We extend Vind’s classical theorem on the measure of blocking coalitions valid in finite dimensional atomless economies (see Vind (1972)), to include the possibility of infinitely many commodities as well as the presence of atoms. The commodity space is assumed to be an ordered Banach space which has possibly the empty positive cone. The lack of interior points is compensated by an additional assumption of a cone of arbitrage that allows us to use Lyapunov’s convexity theorem in its weak form. The measure space of agents involves both negligible and non negligible traders. The extension is proved in the general class of Aubin coalitions for which a suitable version of Grodal’s result (Grodal (1972)) is also formulated. Our results wish to point out the relevance of cone conditions dealing with blocking coalitions of arbitrary measure or weight.     

A bargaining set for roommate problems

Since stable matchings may not exist, we propose a weaker notion of stability based on the credibility of blocking pairs. We adopt the weak stability notion of Klijn and Massó (2003) for the marriage problem and we extend it to the roommate problem. We first show that although stable matchings may not exist, a weakly stable matching always exists in a roommate problem. Then, we adopt a solution concept based on the credibility of the deviations for the roommate problem: the bargaining set. We show that weak stability is not sufficient for a matching to be in the bargaining set. We generalize the coincidence result for marriage problems of Klijn and Massó (2003) between the bargaining set and the set of weakly stable and weakly efficient matchings to roommate problems. Finally, we prove that the bargaining set for roommate problems is always non-empty by making use of the coincidence result.     

Rationality of bargaining solutions

The aim of this paper is to obtain the rationality of two-person bargaining solutions by imposing usual assumptions in cooperative bargaining theory. In particular, it is proved that the conjunction of Independence of Irrelevant Alternatives and either Pareto Continuity or Strong Monotonicity implies this rationality.     

Feasible sets,comparative risk aversion,and comparative uncertainty aversion in bargaining

We study feasible sets of the bargaining problem under two different assumptions: the players are subjective expected utility maximizers or the players are Choquet expected utility maximizers. For the latter case, we consider the effects on bargaining solutions when players become more risk averse and when they become more uncertainty averse.     

Trading bargaining weights

We consider a model, in which two agents are engaged in two separate bargaining problems. We introduce a notion of bargaining weights (bargaining power), which is basically given by asymmetric versions of the Perles–Maschler bargaining solution. Thereby, we view bargaining power as ordinary goods that can be traded in an exchange economy. With equal initial endowment of bargaining power there exists a Walrasian equilibrium in this exchange economy such that the utility allocation in equilibrium coincides with the Perles–Maschler bargaining solution of the aggregate bargaining problem. Equilibrium prices are given by the primitives of the two bargaining problems.     

Multi-lateral strategic bargaining without stationarity

This paper establishes existence of subgame perfect equilibrium in pure strategies for a general class of sequential multi-lateral bargaining games, without assuming a stationary setting. The only required hypothesis is that utility functions are continuous on the space of economic outcomes. In particular, no assumption on the space of feasible payoffs is needed. The result covers arbitrary and even time-varying bargaining protocols (acceptance rules), externalities, and other-regarding preferences. As a side result, we clarify the meaning of assumptions on “continuity at infinity.”     

Decentralized trade with bargaining and voluntary matching

Rubinstein and Wolinsky (1990) study a market with one seller, two buyers, and voluntary matching. Both the competitive outcomep _c and the bilateral bargaining outcomep _b are possible in subgame perfect equilibrium. We consider two variations. First, if there is a cost larger thanp _c −p _c to the seller of changing partner,p _c is the unique outcome, otherwise no restriction expires. In the second variation the seller makes anε-binding preannouncement of whether he will change buyer after disagreement. Ifε is small there are equilibrium prices close top _c . But for anyε, if the discount factor is close to 1, the unique equilibrium price isp _c . The authors thank an anonymous referee for helpful comments.     

Reject and renegotiate: The Shapley value in multilateral bargaining

This paper investigates three distinctive and intuitive renegotiation bargaining protocols that all yield the Shapley value as the unique subgame perfect equilibrium outcome. These protocols, built on the multi-bidding procedure of Pérez-Castrillo and Wettstein (2001), allow more freedom in multilateral bargaining where rejected players can further negotiate and form coalitions. The self-duality of the Shapley value plays a key role in the second and third results. Moreover, these renegotiation protocols allow an actual play along the equilibrium path to restore the Shapley value in case of a ‘mistake’ made before.     

Distressed exchange,bargaining power,and prior capital structure

Financially troubled companies often make Distressed Exchange (DE) offers to its creditors, to postpone costly bankruptcy reorganization. We derive the optimal terms and timing of a DE offer consisting of debt reduction and an equity stake in the restructured firm. The DE terms and timing are affected by shareholder bargaining power, with greater shareholder bargaining power resulting in earlier DE offer, smaller debt reduction and smaller equity stake. The impact of shareholder bargaining power is greater when bankruptcy cost is larger and tax rate is higher. We also show that renegotiability of debt increases ex-ante firm value and results in a higher optimal leverage ratio. Both firm value and optimal leverage ratio are decreasing functions of shareholder bargaining power.     

Auctions with resale and bargaining power

We show that when the weak bidder’s bargaining power in the resale market is weakened, the auctioneer’s revenue from the first-price auction with resale is lower. Using the idea of Coase Theorem, we show that when the resale market is a sequential bargaining model with no commitment, the auctioneer’s revenue is substantially reduced, and the ranking is the opposite of Hafalir and Krishna (2009). We establish a version of the Coase Theorem in the context of the auctions with resale. When Coase Theorem holds, we show that the revenue of the auction with resale is lower than the revenue of the same auction without resale. We also provide the existence and uniqueness of equilibrium for our model of auctions with resale.     

Strategic militancy and the probability of strikes in union-firm bargaining

The paper provides a model that explains the probability of strikes by the union's use of militancy as a strategic tool in bargaining. Militants are useful because they provide a credible threat, hence enhancing the union's bargaining position. Using a multi-stage bargaining game, we show that, in general, militants will be used by the union as a strategic tool. The strategic benefit of militancy is reflected by the fact that the wage and employment level will be higher in a union that uses militants, compared to a union that does not. We use the model to show that the level of militancy and the probability of a strike decrease with the union's power. This suggests that policies that increase the strength of the union will have, at least, a partial positive effect on social welfare. We also show that the model can be viewed as providing an equilibrium of a repeated game, an interpretation that can explain the probability of strikes even in the absence of militants.     

A non-cooperative interpretation of bargaining sets

This paper provides a non-cooperative interpretation for bargaining sets concepts in economic environments. We investigate the implementability of the Aumann-Maschler and Mas-Colell bargaining sets, and provide mechanisms whose subgame perfect equilibrium outcomes realize these sets. These mechanisms, in contrast to general mechanisms suggested in the implementation literature, have a natural structure closely related to that of the rationale underlying the bargaining sets. Furthermore, the strategy sets consist mainly of allocations and coalitions (thus avoiding any reference to preference parameters) and are finite dimensional. Received: 17 February 1997 / Accepted: 2 February 1999     

Implementing the nash extension bargaining solution for non-convex problems

Conley and Wilkie (1993) introduced an axiomatization at the Nash extension bargaining solution defined on a domain of comprehensive but not necessarily convex problems. In this paper we present a non-cooperative game which implements the Nash extension solution in subgame perfect equilibria in the limit as the discount rate applied between rounds of play vanishes.     

The influence of seller learning and time constraints on sequential bargaining in an artificial perishable goods market

This paper investigates the formation of prices in a perishable goods market where agents bargain repeatedly through pair-wise interactions. After extensive field observations, we chose to focus on two aspects that seem important to actors of this market: the passage of time and update in judgement when gathering information. The main feature of the market is that a seller bargaining with a buyer has incomplete information about buyer's willingness to pay and is not sure how her trading partner will evaluate an offer or compare it with other options. On the other hand, buyers have limited time to look for goods and cannot meet all possible sellers before making a decision. Hence agents cannot calculate the best price to offer but receive information through limited interactions, and use this information to choose their actions.An agent-based model was built to represent a framework that mimics the observed market institution and where agent's possible behaviors and learning was made as consistent as possible with gathered data. Simulations were run, first for sensitivity analysis concerning main parameters, then to test the dependance of agents’ learning to (a) the time buyers can spend on the market and (b) the frequency of update in learning by sellers. To validate the model, features produced by the simulated market are compared to the stylized facts gathered for negotiation about four goods. We reproduce the main features of the data on the dynamics of offers, transaction prices and agents’ behavior during the bargaining phases.     

Allocating additional resources to public universities. A DEA bargaining approach

This paper deals with the problem of allocating additional resources in a public university system. Instead of a solution imposed from above, the proposed bargaining approach lets the universities voluntarily agree on a solution that benefits them all. To be realistic the allocation assumes that the universities will keep their current technical efficiency. A bargaining problem is formulated, defining the corresponding feasible set and disagreement point. Four different bargaining solutions, namely Nash, Kalai-Smorodinsky, Egalitarian and Utilitarian, are considered and discussed. The proposed approach is applied to a real-world dataset involving the nine public universities of the Andalusian region. The results of the different bargaining solutions are very consistent as regards the output and utility improvements to be achieved by each university.     

The effects of bargaining power on trade credit in a supply network

We develop a multi-tier supply network model, rooted in social network theory, to evaluate the effect of bargaining power on trade credit and to track the effect of buyers' trade credit on suppliers' trade credit. We apply social network analysis to measure companies' bargaining power in the supply network of Hennes & Mauritz AB (H&M, the Swedish clothing retailer). The results show that the buyer's bargaining power significantly affects the choice of trade credit, and that the supplier's “upstreamness” is significantly associated with its trade credit. We find limited evidence to support the notion of a financial bullwhip effect, a result that merits further research, since this study is limited to the network of one company up to its fourth tier of suppliers in one financial year. Our results can be applied by companies seeking to control their cash flow and, therefore, the financial pressure within their supply network. This study contributes to the literature by bringing social network measures into the buyer–supplier financial flow, as well as offering one of the first empirical examinations of the propagation of financial pressure in a multi-tier supply network.     

On the non-emptiness of the Mas-Colell bargaining set

We introduce an extension of the Mas-Colell bargaining set and construct, by an elaboration on a voting paradox, a superadditive four-person non-transferable utility game whose extended bargaining set is empty. It is shown that this extension constitutes an upper hemicontinuous correspondence. We conclude that the Mas-Colell bargaining set of a non-levelled superadditive NTU game may be empty.     

Bargaining over Managerial Contracts in Delegation Games: The Generalized Oligopolistic Case

The main purpose of this paper is to disclose the properties of the equilibrium outcomes in the differentiated‐products model with two stages: (i) owner‐shareholders negotiate managerial compensation with their managers that comprises their profits and sales (sales delegation) and (ii) they engage in their market competition. The other purpose of this paper is to study the differentiated goods model in which an owner bargains the managerial compensation with her/his manager that comprises her/his profit and her/his rival's profit (relative performance delegation). We further investigate the situation wherein the firm with sales delegation and the firm with the relative performance delegation coexist. Copyright © 2012 John Wiley & Sons, Ltd.     

An empirical examination of the use of bargaining power and its impacts on supply chain financial performance

This study empirically examines how benefits of resource dependence may be bargained away by supply chain finance (SCF) costs incurred to upstream suppliers and downstream buyers through cash conversion cycles. We found that a focal firm may get compensated for its resource contribution with an extra share of the financial gains by using the superior bargaining position over its supply chain partners. Nevertheless, the focal firm may proactively restrain its use of bargaining power when the need for cooperative relationship with its supply chain partners prevails. Managerial and research implications for the introduction of power theory and relation theory to the SCF studies are discussed.