Bargaining in a Long-term Relationship and the Rubinstein Solution |
Common terms and phrases
assumes assumption availability of future B₁ bargaining behavior implies bargaining equilibrium bargaining is restricted bargaining result bargaining with one-period bargaining with unlimited condition of rational consecutive offers corner solutions current bargaining define delay in bargaining demonstrates denoted determined discounted sum discounted utility division of bargaining dynamic path exponential function first-mover advantages folk theorem future bargaining future contracts future partitions future pies future realizations gains of agent gives Hence identical discount factors indifferent between realizing interior solution intertemporal Kiel L'Hôpital's Rule long-term relationship marginal utility minimum bargaining gains non-stationary equilibria one-period offers payoff of agent perfect information Proposition rational bargaining behavior relevant repeated bargaining game Shaked and Sutton specifies split of bargaining splitting a pie strategic bargaining models subagreement subgame-perfect equilibrium sum term theorem threat of delay time-consistent bargaining behavior total bargaining gains unlimited offers utility functions utility is transferable utility of agent whole pie xt+1 and xt