Rubinstein Bargaining with Two-Sided Outside Options

Posted: 12 Aug 1998

See all articles by Clara Ponsati

Clara Ponsati

Autonomous University of Barcelona - Department of Economics and Economic History

Jozsef Sakovics

The University of Edinburgh

Abstract

In this note we show that if in the standard Rubinstein model both players are allowed to leave the negotiation after a rejection, in which case they obtain a payoff of zero, then there exist a continuum of subgame-perfect equilibrium outcomes, including some which involve significant delay. We also fully characterize the case in which, upon quitting, the players can take an outside option of positive value.

JEL Classification: C78

Suggested Citation

Ponsati, Clara and Sakovics, Jozsef, Rubinstein Bargaining with Two-Sided Outside Options. Economic Theory, Abstract Vol. 11 Iss. 3, 1998. Available at SSRN: https://ssrn.com/abstract=114538

Clara Ponsati (Contact Author)

Autonomous University of Barcelona - Department of Economics and Economic History ( email )

Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

Jozsef Sakovics

The University of Edinburgh ( email )

30 Buccleuch Place
Edinburgh, EH8 9JT, Scotland
United Kingdom

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