ECN 611 Handout4

ECN 611 Handout4 - 6coV\,)l/l.ttcs G1.1. H-[;lll\,olout # 4...

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6coV\,£)l/l.ttcs G1. .1. . H-[;lll\,olout #4 The Stahl-Rubinstein impatience model: Stahl, I., Bargaining Theory (Stockholm, Economic Research Institute; 1972) Rubinstein, Ariel, "Perfect equilibria in a bargaining model," Econometrica Vol. 50 (1982) 97-110 Osborne, Martin and Ariel Rubinstein, Bargaining and Markets, Chap 3, "The Strategic Approach: A Model ofAlternating Offers," 29-68. [Available on Rubinstein's web site.] Assumptions: Equally intelligent players Common knowledge Fixed number of bargaining "moments" Players can't speed up, delay Tie-breaking No player is either bargaining averse or bargaining prone. Bargaining example: Sub-game perfect equilibria No impatience One period Two periods All or nothing Three periods 611.04 - 1
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0::: 00 08 T""" « T"""(J) (J) 611.04 - 2
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(j'\ ....... ....... . 0 +:-- I W • • • . . . IY}§. . . . . . . JC" ... . .. ... ' .. . . ... 100 50 a a 50 100 a a a a 100 a a a a 100 a 50 a a 100 a a a 50 a
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0\ ..... ..... . o +:- +:- • • • a 100 a a a a a a a a a 1 a 99 a a 1 a a a a a a a a a a a
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Symmetric impatience: Same time discount rate for both players Factor: .971 = 1/(1 + .03 each) One period Two periods 100 periods ._.
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This note was uploaded on 01/13/2012 for the course ECN 611 taught by Professor Kelly,j during the Fall '08 term at Syracuse.

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ECN 611 Handout4 - 6coV\,)l/l.ttcs G1.1. H-[;lll\,olout # 4...

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