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Endogeneity of Alternating Offers in a Bargaining Game

McKelvey, Richard D. and Palfrey, Thomas R. (1997) Endogeneity of Alternating Offers in a Bargaining Game. Journal of Economic Theory, 73 (2). pp. 425-437. ISSN 0022-0531. doi:10.1006/jeth.1996.2225.

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We investigate an infinite horizon two-person simultaneous move bargaining game with incomplete information and discounted payoffs. The game takes the form of a concession game: in each period, each player chooses to give in or hold out. The game continues until at least one of the players chooses to give in, at which point agreement has been reached and the game terminates. For any discount factor, if the players' priors about each other's type are sufficiently asymmetric, there is a unique Nash equilibrium in which the two players alternate in their willingness to give in.

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Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:Copyright © 1997 Published by Elsevier Inc. Article no. ET962225. This research was supported by National Science Foundation Grant SES-9223701. The authors are grateful to a referee, an associate editor, and seminar participants at Northwestern University and Stanford University for helpful comments.
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ID Code:65134
Deposited On:25 Mar 2016 21:27
Last Modified:10 Nov 2021 23:40

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