Strategic Bargaining with Destructive Power

Posted: 9 Apr 1997

See all articles by Paola Manzini

Paola Manzini

University of St. Andrews - School of Economics and Finance; Institute for the Study of Labor (IZA)

Abstract

This paper studies a two-player alternating offers bargaining model in which one of the agents has the ability to damage permanently the "pie" bargained over. I show how this feature can result in an increase of the cost of rejecting an offer for the "non-harming player". Beside the "Rubinstenian" bilateral monopoly outcome, I show that it is possible to select a "harming" equilibrium in which the sequence of damages to the pie is endogenously determined and payoffs do not vary monotonically with the discount factor.

JEL Classification: D58

Suggested Citation

Manzini, Paola, Strategic Bargaining with Destructive Power. Available at SSRN: https://ssrn.com/abstract=3877

Paola Manzini (Contact Author)

University of St. Andrews - School of Economics and Finance ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

HOME PAGE: http://www.st-andrews.ac.uk/~pm210/

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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