Economic Theory

, Volume 43, Issue 3, pp 457–477 | Cite as

Dominance solvability of dynamic bargaining games

Research Article
  • 80 Downloads

Abstract

We formulate and study a general finite-horizon bargaining game with simultaneous moves and a disagreement outcome that need not be the worst possible result for the agents. Conditions are identified under which the game is dominance solvable in the sense that iterative deletion of weakly dominated strategies selects a unique outcome. Our analysis uses a backward induction procedure to pinpoint the latest moment at which a coalition can be found with both an incentive and the authority to force one of the available alternatives. Iterative dominance then implies that the alternative characterized in this way will be agreed upon at the outset—or, if a suitable coalition is never found, that no agreement will be reached.

Keywords

Backward induction Coalition Core Weak dominance 

JEL Classification

C78 D71 D74 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Abreu D., Gul F.: Bargaining and reputation. Econometrica 68(1), 85–117 (2000)CrossRefGoogle Scholar
  2. Banks J.S., Duggan J.: A bargaining model of collective choice. Am Polit Sci Rev 94(1), 73–88 (2000)CrossRefGoogle Scholar
  3. Baron D.P., Ferejohn J.A.: Bargaining in legislatures. Am Polit Sci Rev 83(4), 1181–1206 (1989)CrossRefGoogle Scholar
  4. Blackwell D.H., Girshick M.A.: Theory of Games and Statistical Decisions. Wiley, New York (1954)Google Scholar
  5. Brandenburger A.M., Keisler H.J.: Epistemic conditions for iterated admissibility. In: Benthem, J. (eds) Theoretical Aspects of Rationality and Knowledge: Proceedings of the Eighth Conference, pp. 31–37. Morgan Kaufmann, San Francisco (2001)Google Scholar
  6. Chatterjee K., Samuelson L.: Perfect equilibria in simultaneous-offers bargaining. Int J Game Theory 19(3), 237–267 (1990)CrossRefGoogle Scholar
  7. Cho S., Duggan J.: Bargaining foundations of the median voter theorem. J Econ Theory 144(2), 851–868 (2009)CrossRefGoogle Scholar
  8. Dekel E.: Simultaneous offers and the inefficiency of bargaining: a two-period example. J Econ Theory 50(2), 300–308 (1990)CrossRefGoogle Scholar
  9. Ewerhart, C.: Ex-ante justifiable behavior, common knowledge, and iterated admissibility. Unpublished manuscript, University of Bonn (2002)Google Scholar
  10. Fudenberg D., Tirole J.: Game Theory. MIT Press, Cambridge (1991)Google Scholar
  11. Gretlein R.J.: Dominance solvable voting schemes: a comment. Econometrica 50(2), 527–528 (1982)CrossRefGoogle Scholar
  12. Gretlein R.J.: Dominance elimination procedures on finite alternative games. Int J Game Theory 12(2), 107–113 (1983)CrossRefGoogle Scholar
  13. Kennan J., Wilson R.B.: Bargaining with private information. J Econ Lit 31(1), 45–104 (1993)Google Scholar
  14. Kreps D.M.: A Course in Microeconomic Theory. Princeton University Press, Princeton (1990)Google Scholar
  15. Marx L.M., Swinkels J.M.: Order independence for iterated weak dominance. Games Econ Behav 18(2), 219–245 (1997)CrossRefGoogle Scholar
  16. Moulin H.: Dominance solvable voting schemes. Econometrica 47(6), 1337–1351 (1979)CrossRefGoogle Scholar
  17. Myerson R.B.: Incentive compatibility and the bargaining problem. Econometrica 47(1), 61–74 (1979)CrossRefGoogle Scholar
  18. Nash J.F. Jr: Two-person cooperative games. Econometrica 21(1), 128–140 (1953)CrossRefGoogle Scholar
  19. Perry M., Reny P.J.: A non-cooperative bargaining model with strategically timed offers. J Econ Theory 59(1), 50–77 (1993)CrossRefGoogle Scholar
  20. Rubinstein A.: Perfect equilibrium in a bargaining model. Econometrica 50(1), 97–110 (1982)CrossRefGoogle Scholar
  21. Sákovics J.: Delay in bargaining games with complete information. J Econ Theory 59(1), 78–95 (1993)CrossRefGoogle Scholar
  22. Simsek, A., Yildiz, M.: Durable bargaining power and stochastic deadlines. Unpublished manuscript, Massachusetts Institute of Technology (2008)Google Scholar
  23. Smith, L., Stacchetti, E.: Aspirational bargaining. Unpublished manuscript, University of Michigan (2003)Google Scholar
  24. Ståhl I.: Bargaining Theory. Stockholm School of Economics, Stockholm (1972)Google Scholar
  25. Sutton J.: Non-cooperative bargaining theory: an introduction. Rev Econ Stud 53(5), 709–724 (1986)CrossRefGoogle Scholar
  26. von Mises L.: Human Action. Contemporary Books, Chicago (1966)Google Scholar

Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Department of EconomicsQueen Mary University of LondonLondonUK

Personalised recommendations