A multi-agent bilateral bargaining model with endogenous protocol |
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Authors: | Sang-Chul Suh Quan Wen |
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Institution: | (1) Department of Economics, University of Windsor, Windsor, ON, Canada, N9B 3P4;(2) Department of Economics, Vanderbilt University, VU Station B #351819, 2301 Vanderbilt Place, Nashville, TN 37235-1819, USA |
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Abstract: | People do bargain over how to bargain. We examine the role of individuals’ ability to pursue certain bargaining protocols
in a multi-agent bilateral bargaining model. Bargaining protocols are not completely settled, but will emerge endogenously
in equilibrium. We show that players’ ability to partially influence bargaining protocols plays a crucial role in determining
equilibrium outcomes. When discounting is not too high, there are multiple subgame perfect equilibria, including inefficient
ones. As the number of players increases, both the set of discount factors that support multiple equilibrium outcomes and
the set of the first proposing player’s equilibrium payoffs expand. The maximum loss of efficiency increases with respect
to the discount factor.
We would like to thank Hongbin Cai, John Conlon, Andrew Daughety, Taiji Furusawa, Byoung Heon Jun, Akira Okada, Ping Wang,
and two anonymous referees for their comments and suggestions. Both authors gratefully acknowledge financial support from
the Social Sciences and Humanities Research Council of Canada. |
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Keywords: | Endogenous protocol Multilateral bargaining Subgame perfect equilibrium |
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