A non-cooperative foundation for the continuous Raiffa solution

Driesen, B., Eccles, P. and Wegner, N. (2017) A non-cooperative foundation for the continuous Raiffa solution. International Journal of Game Theory, 46(4), pp. 1115-1135. (doi: 10.1007/s00182-017-0567-9)

Abstract

This paper provides a non-cooperative foundation for (asymmetric generalizations of) the continuous Raiffa solution. Specifically, we consider a continuous-time variation of the classic Ståhl–Rubinstein bargaining model, in which there is a finite deadline that ends the negotiations, and in which each player’s opportunity to make proposals is governed by a player-specific Poisson process, in that the rejecter of a proposal becomes proposer at the first next arrival of her process. Under the assumption that future payoffs are not discounted, it is shown that the expected payoffs players realize in subgame perfect equilibrium converge to the continuous Raiffa solution outcome as the deadline tends to infinity. The weights reflecting the asymmetries among the players correspond to the Poisson arrival rates of their respective proposal processes.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Driesen, Dr Bram
• Authors: Driesen, B., Eccles, P., and Wegner, N.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: International Journal of Game Theory
• Publisher: Springer
• ISSN: 0020-7276
• ISSN (Online): 1432-1270
• Published Online: 24 February 2017
• Copyright Holders: Copyright © 2017 The Authors
• First Published: First published in International Journal of Game Theory 46(4):1115-1135
• Publisher Policy: Reproduced under a Creative Commons License