Reject and renegotiate: The Shapley value in multilateral bargaining |
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Authors: | Yuan Ju |
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Affiliation: | Department of Economics and Related Studies, University of York, Heslington, York, YO10 5DD, UK |
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Abstract: | 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. |
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Keywords: | Bargaining Subgame perfect equilibrium Shapley value Renegotiation |
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