Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86518
Authors: 
Houba, Harold
Year of Publication: 
2005
Series/Report no.: 
Tinbergen Institute Discussion Paper 05-063/1
Abstract: 
The bargaining model with stochastic order of proposing players is properly embedded in continuous time and it is strategically equivalent to the alternating offers model. For all parameter values, the pair of equilibrium proposals corresponds to the Nash bargaining solution of a modified bargaining problem and the Maximum Theorem implies convergence to the Nash bargaining solution when time between proposals vanishes. The model unifies alternating offers, one-sided offers and random proposers. Only continuous-time Markov processes are firmly rooted in probability theory and offer fundamentally different limit results.
Subjects: 
Bargaining
Negotiation
Alternating offers
Markov process
subgame perfect equilibrium
Nash bargaining solution
Maximum Theorem
JEL: 
C72
C73
C78
Document Type: 
Working Paper

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