Compromise is key in infinitely repeated bargaining with an Evergreen Clause

• 成果类型: Article
• 署名作者: Dutta, Prajit K.
• 署名单位: Columbia University; Columbia University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2020.105170
• 发表日期: 2021
• 关键词: Repeated bargaining; Evergreen Clause; compromise

摘要

This paper considers a new model of repeated bargaining over a flow. In Rubinstein (1982), once an agreement is reached the game ends. Here, the game continues and the agreement can be re-negotiated at cost in any period. It is shown that, with finite memory, there is a unique equilibrium which converges to the Nash Bargaining Solution in the limit. The novel equilibrium feature is the search for compromise; players reject agreements that give them too much. Whilst rejection and delays are never observed on the equilibrium path in a stationary environment, they are observed in a non-stationary one. A folk theorem emerges with infinite memory. (c) 2020 Elsevier Inc. All rights reserved.