Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/194132
Authors: 
Britz, Volker
Year of Publication: 
2019
Series/Report no.: 
Economics Working Paper Series 19/309
Abstract: 
We consider bilateral non-cooperative bargaining on the division of a surplus. Compared to the canonical bargaining game in the tradition of Rubinstein, we introduce additional sources of friction into the bargaining process: Implementation of an agreement and consumption of the surplus can only begin at discrete points in time, such as the first day of a month, quarter, or year. Bargaining rounds are of non-trivial length, so that counter-offers may be made without triggering costly delay. Communication between players is noisy: When players make offers, they are uncertain about the time it takes for the offer to arrive. We analyze delays and payoffs in the unique stationary equilibrium of the game. Frictions tend to make the bargaining process less efficient, but lead to a fairer surplus allocation. We establish conditions under which the equilibrium outcome converges to that in a canonical bargaining model as frictions become small.
Subjects: 
Bargaining
Discount Factor
Timing
Subgame-Perfect Equilibrium
Equilibrium Delay
JEL: 
C72
C78
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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