Skip to main content

Delay in a bargaining game with contracts

Theory and Decision volume 65, pages 339–353 (2008)Cite this article

Abstract

In a multilateral bargaining game where a proposer and responders can set up a “principal–agent” relationship by means of binding cash-offer contracts, we show that there is a Markov SPE with a delay in reaching an agreement. We also show that all the individually rational and efficient payoffs can be supported by SPE.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

References

  • Baliga S. and Serrano R. (1995a). Multilateral bargaining with imperfect information. Journal of Economic Theory 67: 578–589

    Article  Google Scholar 

  • Baliga, S., & Serrano, R. (1995b). Negotiations with side-deals. DP 95-09 Brown University (RI).

  • Baliga S. and Serrano R. (2001). Multilateral negotiations with private side-deals: A multiplicity example. Economics Bulletin 3: 1–7

    Google Scholar 

  • Busch L. and Wen Q. (1995). Perfect equilibria in a negotiation model. Econometrica 63: 545–565

    Article  Google Scholar 

  • Cai H. (2000). Bargaining on behalf of a constituency. Journal of Economic Theory 92: 234–273

    Article  Google Scholar 

  • Cai H. (2003). Inefficient Markov perfect equilibria in multilateral bargaining. Economic Theory 22: 583–606

    Article  Google Scholar 

  • Cardona-Coll D. (2003). Bargaining and strategic demand commitment. Theory and Decision 54: 357–374

    Article  Google Scholar 

  • Chae S. and Yang J. (1988). The unique perfect equilibrium of an N-person bargaining game. Economics Letters 28: 221–223

    Article  Google Scholar 

  • Chae S. and Yang J. (1990). An N-person bargaining process with alternating demands. Seoul Journal of Economics 3: 255–261

    Google Scholar 

  • Chae S. and Yang J. (1994). An N-person pure bargaining game. Journal of Economic Theory 62: 86–102

    Article  Google Scholar 

  • Chowdhury P.R. (2003). Inefficiencies in a model of team formation. Group Decision Negotiation 12: 195–215

    Article  Google Scholar 

  • Coase R. (1960). The problem of social cost. Journal of Law and Economics 3: 1–44

    Article  Google Scholar 

  • Fernandez R. and Glazer J. (1991). Striking for a bargain between two completely informed agents. American Economic Review 81: 240–252

    Google Scholar 

  • Haller H. (1986). Non-cooperative bargaining of N ≥ 3 players. Economics Letters 22: 11–13

    Article  Google Scholar 

  • Haller H. and Holden S. (1990). A letter to the editor on wage bargaining. Journal of Economic Theory 52: 232–236

    Article  Google Scholar 

  • Hart O. (1995). Firms, contracts and financial structure. Oxford University Press, Oxford

    Google Scholar 

  • Herrero, M. J. (1985). N-player bargaining and involuntary unemployment. Ph.D. dissertation, LSE, London.

  • Houba H. and Bolt W. (2000). Holdouts, backdating and wage negotiations. European Economic Review 44: 1783–1800

    Article  Google Scholar 

  • Houba H. and Bolt W. (2002). Credible threats in negotiations—a game theoretic approach. Kluwer Academic Publishers, Boston

    Google Scholar 

  • Huang C.-Y. (2002). Multilateral bargaining: Conditional and unconditional offers. Economic Theory 20: 401–412

    Article  Google Scholar 

  • Hyde C.E. (1997). Bargaining and delay: The role of external information. Theory and Decision 42: 81–104

    Article  Google Scholar 

  • Jun, B. H. (1987). A structural consideration on 3-person bargaining. Ph.D. dissertation, University of Pennsylvania, Pennsylvania.

  • Krishna V. and Serrano R. (1996). Multilateral bargaining. Review of Economic Studies 63: 61–80

    Article  Google Scholar 

  • Maskin E. and Tirole J. (2001). Markov perfect equilibrium: I. Observable actions. Journal of Economic Theory 100: 191–219

    Article  Google Scholar 

  • Mauleon A. and Vannetelbosch V. (2005). Strategic union delegation and strike activity. Canadian Journal of Economics 38: 149–173

    Article  Google Scholar 

  • Osborne M. and Rubinstein A. (1990). Bargaining and markets. Academic Press, San Diego

    Google Scholar 

  • Osborne M. and Rubinstein A. (1994). A course in game theory. MIT Press, Cambridge

    Google Scholar 

  • Shaked, A. (1987). Opting out: Bazaars versus ‘high tech’ markets. Discussion paper 87/98, Suntory Toyota International Centre for Economics and Related Disciplines, London School of Economics.

  • Slantchev B. (2003). The power to hurt: Costly conflict with completely informed states. American Political Science Review 97: 123–133

    Article  Google Scholar 

  • Suh, S.-C., & Wen, Q. (2003). Multi-agent bilateral bargaining with endogenous protocol. mimeo, Vanderbilt University.

  • Suh S.-C., Wen Q. (2006). Multi-agent bilateral bargaining and the Nash bargaining solution. Journal of Mathematical Economics 42: 61–73

    Article  Google Scholar 

  • Sutton J. (1986). Non-cooperative bargaining theory: An introduction. Review of Economic Studies 53: 709–724

    Article  Google Scholar 

  • van Damme E., Selten R. and Winter E. (1990). Alternating bid bargaining with a smallest money unit. Games and Economic Behavior 2: 188–201

    Article  Google Scholar 

  • Vannetelbosch V.J. (1999a). Rationalizability and equilibrium in N-person sequential bargaining. Economic Theory 14: 353–371

    Article  Google Scholar 

  • Vannetelbosch V.J. (1999b). Alternating-offer bargaining and common knowledge of rationality. Theory and Decision 47: 111–138

    Article  Google Scholar 

  • Williamson O. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. The Free Press, New york

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Northwestern University, Evanston, IL, 60208, USA

    Yi-Chun Chen

  2. Institute of Economics, Academia Sinica, Taipei, 115, Taiwan, Republic of China

    Xiao Luo

  3. Department of Economics, National University of Singapore, Singapore, 117570, Singapore

    Xiao Luo

Authors
  1. Yi-Chun Chen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Xiao Luo
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Xiao Luo.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Chen, YC., Luo, X. Delay in a bargaining game with contracts. Theory Decis 65, 339–353 (2008). https://doi.org/10.1007/s11238-008-9111-5

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11238-008-9111-5

Keywords

  • Game theory
  • Multilateral bargaining
  • Delay
  • Contracts

JEL Classification

  • C72
  • C78