Distribution of Surplus in Sequential Bargaining with Endogenous Recognition

25 Pages Posted: 11 Sep 2008

See all articles by Huseyin Yildirim

Huseyin Yildirim

Duke University - Department of Economics

Date Written: July 2008

Abstract

I examine a sequential bargaining situation in which agents compete to propose by expending (unproductive) efforts. Depending on the timing of efforts, I consider two types of "recognition" to select the proposer. Whereas "persistent" recognition refers to cases where competition to propose takes place at a pre-bargaining stage as in congressional committee assignments, "transitory" recognition represents cases where competition to propose is recurring throughout the bargaining as in international negotiations and legal battles. Equilibrium analyses of two recognition types reveal that (1) surplus is distributed more unequally under persistent recognition; (2) social cost is higher under persistent recognition if and only if it attracts a sufficient number of "active" bargainers, who exert a positive effort to propose; and (3) as the number of agents increases, each agent may actually have a greater incentive to propose under transitory recognition, while this incentive is always diminished under persistent recognition.

Keywords: Sequential bargaining, Persistent recognition, Transitory recognition, Distribution of surplus, Rent-seeking contests

JEL Classification: C70, D72

Suggested Citation

Yildirim, Huseyin, Distribution of Surplus in Sequential Bargaining with Endogenous Recognition (July 2008). Economic Research Initiatives at Duke (ERID) Working Paper No. 13. Available at SSRN: https://ssrn.com/abstract=1265129

Huseyin Yildirim (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1805 (Phone)
919-684-8974 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
38
Abstract Views
727
PlumX Metrics