Rubinstein Bargaining with Two-Sided Outside Options
Posted: 12 Aug 1998
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: Suggested Citation