Stakeholder bargaining games

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.