This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. September 2008
  5. Commitment and Conflict in Bilateral Bargaining

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Commitment and Conflict in Bilateral Bargaining

  • Tore Ellingsen
  • Topi Miettinen
American Economic Review
vol. 98, no. 4, September 2008
(pp. 1629–35)
Download Full Text PDF

Abstract

Building on previous work by Schelling and Crawford, we study a model of bilateral bargaining in which negotiators can make binding commitments at a low positive cost c. Most of our results concern outcomes that survive iterated strict dominance. If commitment attempts never fail, there are three such outcomes. In two of them, all the surplus goes to one player. In the third, there is a high probability of conflict. If commitment attempts succeed with probability q < 1, the unique outcome that survives iterated strict dominance entails conflict with probability q2. When c = 0, analogous results hold if the requirement of iterated strict dominance is replaced by iterated weak dominance. (JEL C78, D84)

Citation

Ellingsen, Tore, and Topi Miettinen. 2008. "Commitment and Conflict in Bilateral Bargaining." American Economic Review, 98 (4): 1629–35. DOI: 10.1257/aer.98.4.1629

JEL Classification

  • C78 Bargaining Theory; Matching Theory
  • D74 Conflict; Conflict Resolution; Alliances