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Alternating bid bargaining with a smallest money unit

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  • van Damme, E.E.C.

    (Tilburg University, School of Economics and Management)

  • Selten, R.
  • Winter, E.

Abstract

In a seminal paper, Ariel Rubinstein has shown that impatience implies determinateness of the 2-person bargaining problem. In this note we show that this result depends also on the assumption that the set of alternatives is a continuum. If the pie can be divided only in finitely many different ways, (for example, because the pie is an amount of money and there is a smallest money unit), any partition can be obtained as the result of a subgame perfect equilibrium if the time interval between successive offers is sufficiently small.
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Suggested Citation

  • van Damme, E.E.C. & Selten, R. & Winter, E., 1989. "Alternating bid bargaining with a smallest money unit," Other publications TiSEM 90090bee-21fd-4bb7-ac48-d, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:90090bee-21fd-4bb7-ac48-dd817f8e7706
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    3. Joel Sobel & Ichiro Takahashi, 1983. "A Multistage Model of Bargaining," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(3), pages 411-426.
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