A Continuous-Time Model of Multilateral Bargaining
American Economic Journal: Microeconomics
vol. 7,
no. 1, February 2015
(pp. 208-49)
Abstract
We propose a finite-horizon continuous-time framework for coalitional bargaining, in which players can make offers at random discrete times. In our model: (i) expected payoffs in Markov perfect equilibrium (MPE) are unique, generating sharp predictions and facilitating comparative statics; and (ii) MPE are the only subgame perfect Nash equilibria (SPNE) that can be approximated by SPNE of nearby discrete-time bargaining models. We investigate the limit MPE payoffs as the time horizon goes to infinity and players get infinitely patient. In convex games, we establish that the set of these limit payoffs achievable by varying recognition rates is exactly the core of the characteristic function. (JEL C78)Citation
Ambrus, Attila, and Shih En Lu. 2015. "A Continuous-Time Model of Multilateral Bargaining." American Economic Journal: Microeconomics, 7 (1): 208-49. DOI: 10.1257/mic.20100029Additional Materials
JEL Classification
- C78 Bargaining Theory; Matching Theory
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