SSE/EFI Working Paper Series in Economics and Finance
Patience and Ultimatum in Bargaining
Abstract: This study investigates in a two-stage two-player model
how the decision to make an ultimatum and how much to demand depends on the
impatience of the agents and the pie uncertainty. First, players
simultaneously decide on their ultimatums. If the ultimatum(s) are
compatible then the player(s) receive his (their) demand(s) in the second
period and the eventually remaining player becomes residual claimant. If no
ultimatums are made then there is a Rubinstein-Ståhl bargaining. Relative
impatience induces ultimatums but does not affect the demanded amount. In a
discrete (continuous) setting there exist no equilibrium without an
ultimatum (with mutual ultimatums).
Keywords: Ultimatum; Bargaining; Patience; Rubinstein-Ståhl; (follow links to similar papers)
JEL-Codes: C71; C72; (follow links to similar papers)
16 pages, September 12, 2001
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