# On the convergence to the Nash bargaining solution for action-dependent bargaining protocols

Working paper

Issue number:

2013/44

Publisher:

Université catholique de Louvain

Year:

2013

We consider a non–cooperative multilateral bargaining game and study an action–dependent bargaining
protocol, that is, the probability with which a player becomes the proposer in a round of bargaining
depends on the identity of the player who previously rejected. An important example is the frequently
studied rejector–becomes–proposer protocol. We focus on subgame perfect equilibria in stationary
strategies which are shown to exist and to be efficient. Equilibrium proposals do not depend on the
probability to propose conditional on the rejection by another player, though equilibrium acceptance
sets do depend on these probabilities. Next we consider the limit, as the bargaining friction vanishes. In case no player has a positive probability to propose conditional on his rejection, each player receives his utopia payoff conditional on being recognized and equilibrium payoffs are in general Pareto inefficient. Otherwise, equilibrium proposals of all players converge to a weighted Nash Bargaining Solution, where the weights are determined by the probability to propose conditional on a rejection.