Abstract
We study bilateral bargaining problems with an interested third party, the stakeholder, that enjoys benefits upon a bilateral agreement. To address the strategic implications of stakeholders over negotiations, we consider a model where two bargainers interact in the presence of a third party that (a) can transfer a share of her benefits to the bargainers but cannot receive a share of the bilateral surplus, and (b) while she may not participate in all periods of the negotiation, she cannot remain entirely inhibited. Our main findings are:(1) the stakeholder's (reverse) liquidity constraint implies the existence of a multiplicity of stationary subgame perfect equilibria that include outcomes with very asymmetric bilateral agreements, and (2) the partial participation of the stakeholder may be the source of severe inefficiency.
Original language | English |
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Pages (from-to) | 67-77 |
Number of pages | 11 |
Journal | International Journal of Game Theory |
Volume | 34 |
Issue number | 1 |
DOIs | |
Publication status | Published - Apr 2006 |
Keywords
- bargaining
- stakeholders
- public sector labour
- relations
- third party intervention
- MODEL
- EXTERNALITIES
- INFORMATION