Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204719
Authors: 
Miettinen, Topi
Perea, Andrés
Year of Publication: 
2009
Series/Report no.: 
SITE Working Paper No. 8
Abstract: 
We extend the Ståhl-Rubinstein alternating-offer bargaining procedure to allow players, prior to each bargaining round, to simultaneously and visibly commit to some share of the pie. If commitment costs are small but increasing in the committed share, then the unique outcome consistent with common belief in future rationality (Perea, 2009), or more restrictively subgame perfect Nash equilibrium, exhibits a second mover advantage. In particular, as the smallest share of the pie approaches zero, the horizon approaches in…nity, and commitment costs approach zero, the unique bargaining outcome corresponds to the reversed Rubinstein outcome (d/(1 + d); 1/(1 + d)).
Subjects: 
alternating offer bargaining
bargaining power
commitment
epistemic game theory
patience
JEL: 
C72
C78
D84
Document Type: 
Working Paper

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