Credible Threats in Negotiations A Game-theoretic Approach
The game-theoretic modelling of negotiations has been an active research area for the past five decades, that started with the seminal work by Nobel laureate John Nash in the early 1950s. This book provides a survey of some of the major developments in th
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THEORY AND DECISION LIBRARY General Editors: W. Leinfellner (Vienna) and G. Eberlein (Munich) Series A: Philosophy and Methodology of the Social Sciences Series B: Mathematical and Statistical Methods Series C: Game Theory, Mathematical Programming and Operations Research Series D: System Theory, Knowledge Engineering an Problem Solving
SERIES C: GAME THEORY, MATHEMATICAL PROGRAMMING AND OPERATIONS RESEARCH VOLUME 32
Editor-in Chief: H. Peters (Maastricht University); Honorary Editor: S.H. Tijs (Tilburg); Editorial Board: E.E.C. van Damme (Tilburg), H. Keiding (Copenhagen), J.-F. Mertens (Louvain-la-Neuve), H. Moulin (Rice University), S. Muto (Tokyo University), T. Parthasarathy (New Delhi), B. Peleg (Jerusalem), T. E. S. Raghavan (Chicago), J. Rosenmüller (Bielefeld), A. Roth (Pittsburgh), D. Schmeidler (Tel-Aviv), R. Selten (Bonn), W. Thomson (Rochester, NY). Scope: Particular attention is paid in this series to game theory and operations research, their formal aspects and their applications to economic, political and social sciences as well as to sociobiology. It will encourage high standards in the application of game-theoretical methods to individual and social decision making.
The titles published in this series are listed at the end of this volume.
CREDIBLE THREATS IN NEGOTIATIONS A Game-theoretic Approach by
HAROLD HOUBA Centre for World Food Studies, Vrije Universiteit, Amsterdam, The Netherlands
and
WILKO BOLT Research Department, De Nederlandsche Bank, Amsterdam, The Netherlands
KLUWER ACADEMIC PUBLISHERS NEW YORK, BOSTON, DORDRECHT, LONDON, MOSCOW
eBook ISBN: Print ISBN:
0-306-47539-1 1-4020-7183-3
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Contents
List of Figures List of Tables Preface Acknowledgments On the authors
xi xiii xv xix xxi
1. THE ESSENCE OF NEGOTIATION 1.1. Introduction 1.2. Real life negotiations: motivating examples 1.3. Outline of the book
1 1 3 7
2. A BARGAINING MODEL WITH THREATS 2.1. Introduction 2.2. The bargaining problem 2.2.1 The contract space 2.2.2 Disagreement actions 2.2.3 Utility functions 2.2.4 Mutual and conflicting interests 2.2.5 Pareto efficiency 2.2.6 Individual rationality 2.2.7 Generic uniqueness 2.2.8 Utility representation 2.3. A bargaining game with threats 2.3.1 The order of moves 2.3.2 The players’ information 2.3.3 Information sets and strategies 2.3.4 Outcomes and utilities 2.3.5 Reinterpretation as expected utilities
15 15 16 16 18 19 20 21 23 23 26 28 29 31 32 35 36
v
CREDIBLE THREATS IN NEGOTIATIONS
vi
2.3.6 An appropriate equilibrium concept 2.3.7 Limit sets of equilibria 2.3.8 Markov strategies 2.3.9 Strategi
