Ken Binmore
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780195300574
- eISBN:
- 9780199783748
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300574.003.0017
- Subject:
- Economics and Finance, Microeconomics
This chapter examines noncooperative bargaining models and links them with cooperative bargaining concepts in accordance with the Nash program. Following a discussion of what matters in real-life ...
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This chapter examines noncooperative bargaining models and links them with cooperative bargaining concepts in accordance with the Nash program. Following a discussion of what matters in real-life bargaining, the case in which commitment is possible is studied using the Nash Demand Game. It is shown that a Nash equilibrium of the smoothed version of the Nash Demand Game implements the Nash bargaining solution. Nash threat games are then considered with an application to collusion in Cournot models. The case in which commitment is impossible is considered. Rubinbstein's bargaining model is introduced using one-stage and two-stage Ultimatum Games to set the scene. Rubinstein's theorem that his model has a unique subgame-perfect equilibrium is proved. The outcome is shown to converge on an asymmetric version of the Nash bargaining solution when the time interval between successive proposals becomes sufficiently small. The chapter ends with a discussion of common mistakes in applying the theory.Less
This chapter examines noncooperative bargaining models and links them with cooperative bargaining concepts in accordance with the Nash program. Following a discussion of what matters in real-life bargaining, the case in which commitment is possible is studied using the Nash Demand Game. It is shown that a Nash equilibrium of the smoothed version of the Nash Demand Game implements the Nash bargaining solution. Nash threat games are then considered with an application to collusion in Cournot models. The case in which commitment is impossible is considered. Rubinbstein's bargaining model is introduced using one-stage and two-stage Ultimatum Games to set the scene. Rubinstein's theorem that his model has a unique subgame-perfect equilibrium is proved. The outcome is shown to converge on an asymmetric version of the Nash bargaining solution when the time interval between successive proposals becomes sufficiently small. The chapter ends with a discussion of common mistakes in applying the theory.
David Colander and Craig Freedman
- Published in print:
- 2018
- Published Online:
- May 2019
- ISBN:
- 9780691179209
- eISBN:
- 9780691184050
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691179209.003.0009
- Subject:
- Business and Management, Business History
This concluding chapter argues that Classical Liberal methodology is defined more by an attitude than it is by a particular methodological approach. That attitude blends a deep-seated skepticism of ...
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This concluding chapter argues that Classical Liberal methodology is defined more by an attitude than it is by a particular methodological approach. That attitude blends a deep-seated skepticism of mainstream theory—often manifested by heterodox economists—with an appreciation of the gains that have been made by mainstream theory, an appreciation generally lacking among heterodox critics. A Classical Liberal attitude would also display a mutual respect for the methods that have evolved in mainstream and non-mainstream traditions to handle theoretical problems. The chapter then presents six economists who displayed a Classical Liberal attitude to methodology in important aspects of their work: Edward Leamer, Ariel Rubinstein, Alvin Roth, Paul Romer, Amartya Sen, and Dani Rodrik.Less
This concluding chapter argues that Classical Liberal methodology is defined more by an attitude than it is by a particular methodological approach. That attitude blends a deep-seated skepticism of mainstream theory—often manifested by heterodox economists—with an appreciation of the gains that have been made by mainstream theory, an appreciation generally lacking among heterodox critics. A Classical Liberal attitude would also display a mutual respect for the methods that have evolved in mainstream and non-mainstream traditions to handle theoretical problems. The chapter then presents six economists who displayed a Classical Liberal attitude to methodology in important aspects of their work: Edward Leamer, Ariel Rubinstein, Alvin Roth, Paul Romer, Amartya Sen, and Dani Rodrik.
