Commitment and Conflict in Bilateral Bargaining
American Economic Review
vol. 98,
no. 4, September 2008
(pp. 1629-35)
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.98.4.1629JEL Classification
- C78 Bargaining Theory; Matching Theory
- D74 Conflict; Conflict Resolution; Alliances