Group Decision and Negotiation

, Volume 4, Issue 1, pp 71–97 | Cite as

Strategic bargaining for the control of a dynamic system in state-space form

  • Harold Houba
  • Aart de Zeeuw


The partition of a pie model is integrated into a two-player difference game in state-space form with a finite horizon, in order to derive strategic bargaining outcomes in the framework of difference games. It is assumed that agreements are binding. In contrast to the model for the partition of a pie, the outcomes are not necessarily Pareto-efficient. For one-dimensional, linear-quadratic difference games, the subgame perfect bargaining outcome is unique, Paretoefficient, and analytically tractable. However, for higher dimensions the linear-quadratic structure breaks down and one has to resort to numerical methods.

Key Words

difference games strategic bargaining subgame perfectness 


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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Harold Houba
    • 1
    • 2
  • Aart de Zeeuw
    • 3
  1. 1.Free UniversityAmsterdam
  2. 2.Department of EconometricsTilburg UniversityTilburgthe Netherlands
  3. 3.Tilburg Universitythe Netherlands

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