Strategic bargaining for the control of a dynamic system in state-space form

Harold Houba*, Aart de Zeeuw

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


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 languageEnglish
Pages (from-to)71-97
Number of pages27
JournalGroup Decision and Negotiation
Issue number1
Publication statusPublished - 1 Jan 1995


  • difference games
  • strategic bargaining
  • subgame perfectness

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