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Alternating-Offers Bargaining with Nash Bargaining Fairness Concerns

Authors :
Zhongwei Feng
Fangning Li
Chunqiao Tan
Source :
Behavioral Sciences, Vol 13, Iss 2, p 124 (2023)
Publication Year :
2023
Publisher :
MDPI AG, 2023.

Abstract

The Rubinstein alternating-offers bargaining game is reconsidered, where players show fairness concerns and their fairness references are characterized by the Nash bargaining solution. The objective of this paper is to explore the impact of fairness concerns in the alternating-offer bargaining game. Alternating-offer bargaining with fairness concerns is developed. We construct a subgame perfect equilibrium and show its uniqueness. Then, it is shown that players’ payoffs in the subgame perfect equilibrium are positively related to their own fairness concern coefficient and bargaining power and negatively to the opponents’ fairness concern coefficient. Moreover, it is shown that the limited equilibrium partition depends on the ratio of discount rates of the two players when the time lapse between two offers goes to zero. Finally, the proposed model is applied to the bilateral monopoly market of professional basketball players, and some properties of equilibrium price are shown. Our result provides the implication that players should carefully weigh their own fairness concerns, bargaining power and fairness concerns of their opponents, and then make proposals, rather than simply follow the suggestion that the proposal at the current stage is higher than that at the past stages.

Details

Language :
English
ISSN :
2076328X
Volume :
13
Issue :
2
Database :
Directory of Open Access Journals
Journal :
Behavioral Sciences
Publication Type :
Academic Journal
Accession number :
edsdoj.1b21787609b4d138732203eb8c73d90
Document Type :
article
Full Text :
https://doi.org/10.3390/bs13020124