Strategic Effects and Incentives in Multi-issue Bargaining Games

the initial bargaining stage when r₁ < r₂λ₁λ₂ . The overall effects of an increase in τ
on player 2’s payoff is positive only if player 1 is sufficiently more patient than player
2(r₁ < r₂/(2 + λ₁λ₂)), in other words, the initial concessions are sufficiently large.

3 Changing the Order of the Issues

In this section, the focus is on agenda 2, in which the first issue is represented by
cake 2. We then show what incentives parties need to take into account in forming
their preferences over agendas. Let

= λ2(l — δ1δ2) + α2(l + δ2)(l — δι))    = (1 — δ2)α2 — λ2δ2(l — δ1δ2)]

λ1λ2δ2(l — δ2)            ,          ^λι^λ2^δ2(1 + ^δι)(1 ^{— δ}2)

_ (1 — δ2)α2δι — λ2(l — δ1δ2)]    = δ1(λ2(l — δ1δ2) + α2(l + δ2)(l — δι))
^{λ           λ}1^λ2(^{l + δ}1)(^{l — δ}2)     ,                     λ1λ2(l — δ2)

As for the analysis of agenda 1, for α₁ that varies between the boundaries p ≤ o ≤
q ≤ n, we can define different demands in SPE with immediate agreement. These are
at most three.

Proposition 2 Let λ₂ ° λ₂ with i = l, 2, then there is an SPE in which the agree-
ment is reached immediately over the partition of every single cake. At the second
stage, parties play as in the RBM. At the first stage, the equilibrium demand of player
l (2) is x1 (y2 , respectively), as defined in the following cases.

1) If 0 ≤ α₁ ≤ o, the equilibrium demands are x₁ =l and y₂ = ye₂ ∈ (0, l), defined

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