Van Essen, Matthew (2014): A Simple Bargaining Model where Parties Make Errors.

PDF
MPRA_paper_58952.pdf Download (291kB)  Preview 
Abstract
In this paper, we develop a bargaining model where parties (or their intermediaries) make errors when reporting their bid. We characterize the Nash equilibria of the game and show that there is a unique equilibrium where trade takes place. This trade equilibrium is shown to converge to the Nash Bargaining Solution of the problem as trembles diminish. Finally, we discuss our results in the context of the previous literature providing a critique of the model and analysis found in Carlsson (1991).
Item Type:  MPRA Paper 

Original Title:  A Simple Bargaining Model where Parties Make Errors 
Language:  English 
Keywords:  Nash Program, Nash Bargaining Solution, Equilibrium Selection, Nash Demand Game 
Subjects:  C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C71  Cooperative Games C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C72  Noncooperative Games C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C78  Bargaining Theory ; Matching Theory 
Item ID:  58952 
Depositing User:  Matthew J. Van Essen 
Date Deposited:  28 Sep 2014 20:28 
Last Modified:  28 Sep 2019 03:15 
References:  1. Binmore, K. (1987a). "Nash Bargaining II." The Economics of Bargaining, ed. by Binmore and Dasgupta, Basil Blackwell, Cambridge Mass. 2. Binmore, K. (1987b). "Nash Bargaining and Incomplete Information." The Economics of Bargaining, Ed. by Binmore and Dasgupta, Basil Blackwell, Cambridge Mass. 3. Carlsson, H. (1991). "A Bargaining Model where Parties Make Errors." Econometrica, 59, 5, p.14871496. 4. Kaneko, M. (1981). "A Bilateral Monopoly and the Nash Cooperative Solution," Journal of Economic Theory, 24, 311327. 5. Luce, D. and Raiffa, H. (1957). Games and Decisions: Introduction and Critical Survey. Dover Publications Inc., New York. 6. Malueg, D. (2010). "Mixed Strategy Equilibria in the Nash Demand Game," Economic Theory, 44(2010), 243 270. 7. Nash, J. (1950). "The Bargaining Problem." Econometrica, 18, p. 155162. 8. Nash, J. (1953). "Twoperson Cooperative Games." Econometrica, 21, p. 128140. 9. Osborne, M. and Rubinstein, A. (1990). Bargaining and Markets. Academic Press, New York. 10. Van Damme, E. (1991). Stability and Perfection of Nash Equilibrium. Second Edition. SpringerVerlag. 11. Young, H.P. (1993). "An Evolutionary Model of Bargaining." Journal of Economic Theory, 59, p.145168. 
URI:  https://mpra.ub.unimuenchen.de/id/eprint/58952 