Different Time Preferences and Non-Stationary Contracts in Negotiations

H.E.D. Houba, Q. Wen

    Research output: Contribution to JournalArticleAcademic

    Abstract

    When time preferences differ, non-stationary contracts strictly dominate stationary contracts. The unique equilibrium converges to the Nash bargaining solution in which the less patient player always receives 50% of his utopia payoff, regardless of the difference between the players' discount rates. © 2005 Elsevier B.V. All rights reserved.
    Original languageEnglish
    Pages (from-to)273-279
    JournalEconomics Letters
    Volume91
    DOIs
    Publication statusPublished - 2006

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