Bargaining and efficiency in networks
We study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus. Players who reach agreement are removed from the network without replacement. The global logic of efficient matchings and the local nature of bargaining, in combina...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Language: | en_US |
| Published: |
Elsevier
2015
|
| Online Access: | http://hdl.handle.net/1721.1/98851 https://orcid.org/0000-0002-7436-2800 |
| _version_ | 1826189272139431936 |
|---|---|
| author | Abreu, Dilip Manea, Mihai |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Abreu, Dilip Manea, Mihai |
| author_sort | Abreu, Dilip |
| collection | MIT |
| description | We study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus. Players who reach agreement are removed from the network without replacement. The global logic of efficient matchings and the local nature of bargaining, in combination with the irreversible exit of player pairs following agreements, create severe hurdles to the attainment of efficiency in equilibrium. For many networks all Markov perfect equilibria of the bargaining game are inefficient, even as players become patient. We investigate how incentives need to be structured in order to achieve efficiency via subgame perfect, but non-Markovian, equilibria. The analysis extends to an alternative model in which individual players are selected according to some probability distribution, and a chosen player can select a neighbor with whom to bargain. |
| first_indexed | 2024-09-23T08:12:11Z |
| format | Article |
| id | mit-1721.1/98851 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T08:12:11Z |
| publishDate | 2015 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | mit-1721.1/988512022-09-30T08:15:25Z Bargaining and efficiency in networks Abreu, Dilip Manea, Mihai Massachusetts Institute of Technology. Department of Economics Manea, Mihai We study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus. Players who reach agreement are removed from the network without replacement. The global logic of efficient matchings and the local nature of bargaining, in combination with the irreversible exit of player pairs following agreements, create severe hurdles to the attainment of efficiency in equilibrium. For many networks all Markov perfect equilibria of the bargaining game are inefficient, even as players become patient. We investigate how incentives need to be structured in order to achieve efficiency via subgame perfect, but non-Markovian, equilibria. The analysis extends to an alternative model in which individual players are selected according to some probability distribution, and a chosen player can select a neighbor with whom to bargain. 2015-09-22T12:00:22Z 2015-09-22T12:00:22Z 2011-11 2011-09 Article http://purl.org/eprint/type/JournalArticle 00220531 1095-7235 http://hdl.handle.net/1721.1/98851 Abreu, Dilip, and Mihai Manea. “Bargaining and Efficiency in Networks.” Journal of Economic Theory 147, no. 1 (January 2012): 43–70. https://orcid.org/0000-0002-7436-2800 en_US http://dx.doi.org/10.1016/j.jet.2011.11.003 Journal of Economic Theory Creative Commons Attribution-Noncommercial-NoDerivatives http://creativecommons.org/licenses/by-nc-nd/4.0/ application/pdf Elsevier MIT Web Domain |
| spellingShingle | Abreu, Dilip Manea, Mihai Bargaining and efficiency in networks |
| title | Bargaining and efficiency in networks |
| title_full | Bargaining and efficiency in networks |
| title_fullStr | Bargaining and efficiency in networks |
| title_full_unstemmed | Bargaining and efficiency in networks |
| title_short | Bargaining and efficiency in networks |
| title_sort | bargaining and efficiency in networks |
| url | http://hdl.handle.net/1721.1/98851 https://orcid.org/0000-0002-7436-2800 |
| work_keys_str_mv | AT abreudilip bargainingandefficiencyinnetworks AT maneamihai bargainingandefficiencyinnetworks |