Bargaining without Commitment *
نویسنده
چکیده
A fundamental assumption in all sequential bargaining models is that when an offer is accepted the bargaining terminates with the implementation of that proposal. The proposer cannot change his mind; he is, in effect, committed to his proposal. In this short paper we explore the consequence of relaxing this (rather strong) commitment assumption. Our main result indicates that this commitment assumption is a fundamental reason for the uniqueness of the subgame perfect equilibrium partition in the Rubinstein bargaining model. This main result states that if the (common) discount factor of each bargainer is greater than l/d (=0.7), then any partition of the unit size cake can be supported as a subgame perfect equilibrium of the modified Rubinstein bargaining model (" modified " in that the commitment assumption is dropped). The multiplicity of equilibria is generated by constructing supergame-type punishment strategies. Journal ofEconomic Literature Classification Number: 026 o IWO Academic PRSS, IN.
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