Extreme equilibria in the negotiation model with different time preferences

Relative Concerns and Delays in Bargaining with Private Information

“…10 The data in Table 1 seem consistent with delays reported in Cramton and Tracy [14]. 11 De Bruyn and Bolton [2] have shown that the ERC model provides satisfactory fit for sequential bargaining game data along several dimensions (first-offer behavior, rejection behavior, disadvantageous counteroffers, ...) and that the estimates of fairness preferences obtained in one bargaining situation are indicative of bargainer behavior in other situations where strategic parameters such as time cost, stake and bargaining length differ. 12 The condition 1/2 > 0 on the compassion parameter guarantees the existence of an interior solution to the bargaining problem.…”

“…However, if is positive and equal to (i.e., compassion is as strong as envy and there is no pride), then the Fehr and Schmidt's model reverts to Bolton and Ockenfels' model of inequality aversion and delay in reaching an agreement decreases as relative concerns increase. 11 We have limited the analysis to the case where only one player is not purely selfish. We now provide some insights about what would happen under complete information if both players had relative concerns captured by Fehr and Schmidt's [8] model of inequality aversion with and 1/2 > 0.…”

“…For instance, Watson [12] has examined Rubinstein's bargaining games in which with high probability a player's discount rate is close 5 Multiple SPE arise and agreements may be delayed (even with complete information) if at least one player has the possibility to reduce the value of the cake after her own proposal is rejected (see Avery and Zemsky [10]). Houba and Wen [11] have shown that in a bargaining model with a disagreement game between offers and counteroffers, it may not be Pareto efficient to reach an immediate agreement. Another source for agreements reached with delay is incomplete information.…”

Time-Preference Heterogeneity and Multiplicity of Equilibria in Two-Group Bargaining

“…In these settings, heterogeneous time preferences have been shown to allow agents to trade payoffs across time. This possibility has been also exploited in [11] by introducing a normal form disagreement game in a bilateral distributive bargaining setting, to show that multiple bargaining equilibria are attained. Apart from these trading opportunities, time preference has been shown to be an important ingredient of any non-cooperative bargaining process since the seminal paper of Rubinstein [12].…”

Extremal Pure Strategies and Monotonicity in Repeated Games

“…The recent work has focused on the case of unequal discount factors (Lehrer and Pauzner 1999;Salonen and Vartiainen 2008;Houba and Wen 2011;Guéron et al 2011;Chen and Takahashi 2012). Moreover, Gossner and Hörner (2010) examine the lowest equilibrium payoffs when the players cannot perfectly observe the opponents' actions.…”