Bargaining in the Shadow of Power
نویسندگان
چکیده
Often a bargainer can use some form of power—legal, military, or political—to impose a settlement. How does the “outside” option of being able to impose a settlement, albeit at some cost, affect the bargaining? And, how does the probability that the bargaining will break down vary with the distribution of power between the bargainers? These questions are examined by adding the option of imposing a settlement to Rubinstein’s game of dividing a pie. Each actor can accept an offer, make a counteroffer, or try to impose a solution. Imposing a settlement is, however, costly and each bargainer has private information about its cost. Journal of Economic Literature classification number: C72. © 1996 Academic Press,
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