Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Alternating bid bargaining with a smallest money unit. / Van Damme, E.; Selten, R.; Winter, E.
In: Games and Economic Behavior, Vol. 2, No. 2, 1990, p. 188-201.Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Alternating bid bargaining with a smallest money unit
AU - Van Damme, E.
AU - Selten, R.
AU - Winter, E.
PY - 1990
Y1 - 1990
N2 - In a seminal paper, Ariel Rubinstein has shown that impatience implies determinateness of the two-person bargaining problem. In this note we show that this result depends also on the assumption that the set of alternatives is a continuum. If the pie can be divided only in finitely many different ways (for example, because the pie is an amount of money and there is a smallest money unit), any partition can be obtained as the result of a subgame perfect equilibrium if the time interval between successive offers is sufficiently small. We also show that, for a fixed discount rate, all subgame perfect equilibrium payoffs of the discrete game converge to the solution obtained by Rubinstein if the smallest money unit tends to zero. © 1990.
AB - In a seminal paper, Ariel Rubinstein has shown that impatience implies determinateness of the two-person bargaining problem. In this note we show that this result depends also on the assumption that the set of alternatives is a continuum. If the pie can be divided only in finitely many different ways (for example, because the pie is an amount of money and there is a smallest money unit), any partition can be obtained as the result of a subgame perfect equilibrium if the time interval between successive offers is sufficiently small. We also show that, for a fixed discount rate, all subgame perfect equilibrium payoffs of the discrete game converge to the solution obtained by Rubinstein if the smallest money unit tends to zero. © 1990.
U2 - 10.1016/0899-8256(90)90029-T
DO - 10.1016/0899-8256(90)90029-T
M3 - Journal article
VL - 2
SP - 188
EP - 201
JO - Games and Economic Behavior
JF - Games and Economic Behavior
SN - 0899-8256
IS - 2
ER -