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American Economic Review: Vol. 98 No. 4 (September 2008)
AER Volume. 98, Issue 4 | 
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Commitment and Conflict in Bilateral Bargaining
Article Citation
Ellingsen, Tore, and
Topi Miettinen. 2008. "Commitment and Conflict in Bilateral Bargaining."
American Economic Review,
98(4): 1629-35.
DOI: 10.1257/aer.98.4.1629
DOI: 10.1257/aer.98.4.1629
Abstract
Building on previous work by Schelling and Crawford, we study a model of
bilateral bargaining in which negotiators can make binding commitments at a low positive cost c. Most of our results concern outcomes that survive iterated strict dominance. If commitment attempts never fail, there are three such outcomes. In two of them, all the surplus goes to one player. In the third, there is a high probability of conflict. If commitment attempts succeed with probability q < 1, the unique outcome that survives iterated strict dominance entails conflict with probability q2. When c = 0, analogous results hold if the requirement of iterated strict dominance is replaced by iterated weak dominance. (JEL C78, D84)
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Full-text Article
Authors
Ellingsen, Tore (Stockholm School of Economics)
Miettinen, Topi (Max Planck Institute of Economics, Jena)
Miettinen, Topi (Max Planck Institute of Economics, Jena)
JEL Classifications
C78: Bargaining Theory; Matching Theory
D74: Conflict; Conflict Resolution; Alliances
D74: Conflict; Conflict Resolution; Alliances
