Job Market Paper

Non-cooperative Analysis of Monotonic Solutions

I provide a two-person bargaining game that supports in SPE monotonic cooperative solutions. This bargaining game allows either party to exclude the other from a negotiation and to consume the residual surplus. I prove that any form of competition that puts this ability in the hands of the person who values it the most gives rise to a monotonic solution. I also show that the hold-up problem provides an interesting example of an economic environment in which the strategic form that I present is appropriate. More generally, my analysis demonstrates the insights that can be obtained by simultaneously approaching bargaining problems from both non-cooperative and cooperative points of view: the Nash Program. It also shows the relevance of cooperative values other than the Nash solution in bargaining situations.

References

Hugo F. Sonnenschein (Chair)     University of Chicago   773-702-2417        hfsonnen@uchicago.edu
Roger B. Myerson                           University of Chicago   773-702-6576        myerson@uchicago.edu
Philip J. Reny                                  University of Chicago   773-702-2417              preny@uchicago.edu  Grace Tsiang                                    University of Chicago   773-834-1972            gtsiang@uchicago.edu