Games and Economic Behavior
Ravideep Sethi, Ewout Verriest
Division of Quantitative Analysis of Markets and Organizations
Abstract
We consider a dynamic bargaining environment where the current status quo influences future decision-making and where one player always has veto power. The player with veto power can sometimes benefit by giving the other players a greater influence on setting the proposals, as it can break cooperation between those other players. Our results fit existing experimental data better than earlier models. Additionally, we develop a refinement technique using coalition proofness that is novel in this literature, and we how that it can be applied to other environments.
