Stationarity, Rationalizability and Bargaining

S-Tier
Journal: Review of Economic Studies
Year: 1994
Volume: 61
Issue: 2
Pages: 357-374

Score contribution per author:

8.073 = (α=2.02 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Without assuming rational expectations, we examine the implications of a stationarity assumption in a standard bargaining model with one-sided incomplete information, where the seller makes an offer in each period. Instead of computing a weakly stationary equilibrium, we invoke rationalizability (Bernheim (1984) and Pearce (1984)) combined with the restriction that the buyer's acceptance rule be weakly stationary. There exists a pair of rationalizable sets of pure strategies for the seller and the buyer which are weakly stationary. We demonstrate that any initial offer from the seller induced by a strategy rationalized by a weakly stationary acceptance rule for the buyer must entail the Coase property. Our result does not presume the selection of a particular equilibrium and follows directly from the weak stationarity assumption of the buyer's acceptance rule and the rational behaviour of the players.

Technical Details

RePEc Handle
repec:oup:restud:v:61:y:1994:i:2:p:357-374
Journal Field
General
Author Count
1
Added to Database
2026-01-25