Rubinstein bargaining with two-sided outside options

C Ponsati, J Sakovics*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    43 Citations (Scopus)

    Abstract

    In this note we show that if in the standard Rubinstein model both players are allowed to leave the negotiation after a rejection, in which case they obtain a payoff of zero, then there exist a continuum of subgame-perfect equilibrium outcomes, including some which involve significant delay. We also fully characterize the case in which, upon quitting, the players can take an outside option of positive value.

    Original languageEnglish
    Pages (from-to)667-672
    Number of pages6
    JournalEconomic Theory
    Volume11
    Issue number3
    Publication statusPublished - May 1998

    Keywords

    • PERFECT EQUILIBRIUM
    • MODEL

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