Finite Horizon Bargaining and the Consistent Field

Armando Gomes, Sergiu Hart and Andreu Mas-Colell

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We explore the relationships between noncooperative bargaining games and the consistent value for non-transferable utility (NTU) cooperative games. A dynamic approach to the consistent value is introduced: the consistent vector field. The main contribution is to establish that the consistent field is intimately related to the concept of subgame perfection for finite horizon noncooperative bargaining games, as the horizon goes to infinity and the cost of delay goes to zero. We then show that in the general NTU case -- unlike the transferable utility and pure bargaining cases -- the finite horizon subgame perfect equilibria need not approach the consistent value.

Journal of Economic Literature Classification Numbers: C71, C72