{"title":"Bargaining as a Struggle Between Competing Attempts at Commitment","authors":"Rohan Dutta","doi":"10.1093/restud/rdad106","DOIUrl":null,"url":null,"abstract":"Abstract The strategic importance of commitment in bargaining is widely acknowledged. Yet disentangling its role from key features of canonical models, such as proposal power and reputational concerns, is difficult. This paper introduces a model of bargaining with strategic commitment at its core. Following Schelling (1956), commitment ability stems from the costly nature of concession and is endogenously determined by players’ demands. Agreement is immediate for familiar bargainers, modelled via renegotiation-proofness. The unique prediction at the high concession cost limit provides a strategic foundation for the Kalai bargaining solution. Equilibria with delay feature a form of gradualism in demands.","PeriodicalId":48449,"journal":{"name":"Review of Economic Studies","volume":null,"pages":null},"PeriodicalIF":5.9000,"publicationDate":"2023-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Economic Studies","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1093/restud/rdad106","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
Abstract The strategic importance of commitment in bargaining is widely acknowledged. Yet disentangling its role from key features of canonical models, such as proposal power and reputational concerns, is difficult. This paper introduces a model of bargaining with strategic commitment at its core. Following Schelling (1956), commitment ability stems from the costly nature of concession and is endogenously determined by players’ demands. Agreement is immediate for familiar bargainers, modelled via renegotiation-proofness. The unique prediction at the high concession cost limit provides a strategic foundation for the Kalai bargaining solution. Equilibria with delay feature a form of gradualism in demands.
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Founded in 1933 by a group of young British and American economists, The Review of Economic Studies aims to encourage research in theoretical and applied economics, especially by young economists. Today it is widely recognised as one of the core top-five economics journals. The Review is essential reading for economists and has a reputation for publishing path-breaking papers in theoretical and applied economics. The Review is committed to continuing to publish strong papers in all areas of economics. The Editors aim to provide an efficient and high-quality review process to the Review''s authors. Where articles are sent out for full review, authors receive careful reports and feedback. Since 1989 The Review has held annual May Meetings to offer young students in economics and finance the chance to present their research to audiences in Europe.
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