Abstract
The partition of a pie model is integrated into a two-player difference game in state-space form with a finite horizon, in order to derive strategic bargaining outcomes in the framework of difference games. It is assumed that agreements are binding. In contrast to the model for the partition of a pie, the outcomes are not necessarily Pareto-efficient. For one-dimensional, linear-quadratic difference games, the subgame perfect bargaining outcome is unique, Paretoefficient, and analytically tractable. However, for higher dimensions the linear-quadratic structure breaks down and one has to resort to numerical methods.
Original language | English |
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Pages (from-to) | 71-97 |
Number of pages | 27 |
Journal | Group Decision and Negotiation |
Volume | 4 |
Issue number | 1 |
DOIs | |
Publication status | Published - 1 Jan 1995 |
Keywords
- difference games
- strategic bargaining
- subgame perfectness