We construct a model of collective search in which players gradually approach the Pareto frontier. The players have imperfect control over which improvements to the status quo will be considered. Inefficiency takes place due to the difficulty in finding improvements acceptable to both parties. The process is path dependent, with early agreements determining long-run outcomes. It may also be cyclical, as players alternate between being more and less accommodating.
Acharya, Avidit, and Juan Ortner.
"Paths to the Frontier."
American Economic Journal: Microeconomics,
Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Bargaining Theory; Matching Theory
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness