Abstract
This paper studies alternating-offer bargaining with players who have history-dependent reciprocity preferences. To allow for reciprocal motivation, the existing history-dependent models are modified by reversing the way aspirations depend on previous offers. The model exhibits a unique equilibrium where an agreement is reached immediately. As the players' discount factors approach unity, players share the pie according to the golden division: the responder's share of the whole pie coincides with the ratio of the proposer's and the responder's shares. Thus, there is a first-mover disadvantage.
| Original language | English |
|---|---|
| Peer-reviewed scientific journal | Finnish Economic Papers |
| Volume | 23 |
| Issue number | 1 |
| Pages (from-to) | 1-15 |
| Number of pages | 15 |
| ISSN | 0784-5197 |
| Publication status | Published - 2010 |
| MoE publication type | A1 Journal article - refereed |
Keywords
- 511 Economics