Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 61: The Evolution of Bargaining Behavior

Tore Ellingsen ()
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Tore Ellingsen: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden

Abstract: The paper examines the evolutionary foundations of bilateral bargaining behavior, emphasizing the trade-off between commitment and flexibility. When the pie's size is certain, evolution favors the "fair" strategy; accept any share greater than or equal to one half, reject any smaller share. The unique outcome is hence an equal split. In noisy environments, more flexible behavior tends to appear in equilibrium. Since flexibility attracts greediness, there is then a positive probability of conflict.

Keywords: Bargaining; evolution; commitment; Coase Theorem

JEL-codes: C78

16 pages, July 1995

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