Noncooperative Model of Collective Decision Making: Multi-Lateral Bargaining Approach, A

Gordon C. Rausser, Leo K. Simon
January 1992  [90-GATT 22]

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Rausser, G. and L. Simon. 1992. "Noncooperative Model of Collective Decision Making: Multi-Lateral Bargaining Approach, A." CARD paper 90-GATT 22. Center for Agricultural and Rural Development, Iowa State University.


This paper proposes a noncooperative model of multilateral bargaining. The model can be viewed as an extension of the famous Stahl-Rubinstein bargaining game. Two players take turns proposing a division of a "pie." After one player has proposed a division, the other can accept or reject the proposal. If the proposal is accepted, the game ends and the division is adopted; if it is rejected, the second player then makes a proposal, which the first player then accepts or rejects. And so on. In Stahl's formulation, the game continues for a finite number of rounds; in Rubinstein's extension, the number of rounds is infinite. We propose a generalization of this model to incorporate multiple players and multidimensional issue spaces. We consider a sequence of games with infinite bargaining horizons, and study the limit points of the equilibrium outcomes as the horizon is extended without bound. A novel feature of our model is that the proposer is chosen randomly "by nature" in each round or bargaining, according to a prespecified vector of strictly positive "access probabilities."