Complexity and Efficiency in Repeated Games with Negotiation
نویسنده
چکیده
This paper considers the “negotiation game” (Busch and Wen [4]) which combines the features of two-person alternating offers bargaining and repeated games. Despite the forces of bargaining, the negotiation game in general admits a large number of equilibria some of which involve delay in agreement and inefficiency. In order to isolate equilibria in this game, we explicitly consider the complexity of implementing a strategy, introduced in the literature on repeated games played by automata. It turns out that when the players have a preference for less complex strategies (even at the margin) only efficient equilibria survive. Thus, complexity and bargaining in tandem may offer an explanation for co-operation in repeated games. JEL Classification: C72, C78
منابع مشابه
Efficiency in Negotiation: Complexity and Costly Bargaining∗
Even with complete information, two-person bargaining can generate a large number of equilibria, involving disagreements and inefficiencies, in (i) negotiation games where disagreement payoffs are endogenously determined (Busch and Wen [4]) and (ii) costly bargaining games where there are transaction/participation costs (Anderlini and Felli [2]). We show that when the players have (at the margi...
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