Strategic Effects and Incentives in Multi-issue Bargaining Games

(1 — δι)[1 — δ₁δ2 + αιλι(1 + δι)(1 — δ₂)]
^{(1 - δ}ι^δ2)

Then the equilibrium payoffs are as follows:

2) If o ≤ α₁ ≤ q, the equilibrium demands are defined in (27) and (28) below

(1 — δ₂)[(1 — διδ₂)λι + (1 — δ1)(α2λ1λ2(1 + δ₂) — δ₂αι(1 + δι))]
^λ1(^{1 — δ}1^δ2)2

(1 — δ1)[(1 — δ1δ2)λ1 + (1 — δ2)(α1(1 + δ1) — α2λ1λ2δ1(1 + δ₂))]
^λ1(^{1 — δ}1^δ2)2

and the equilibrium payoffs are as follows:

3) If q ≤ α₁ ≤ 1, the equilibrium demands are y₂ =1 and x₁ = xe₁ ∈ (0, 1), where

(1 — δ2)[(1 — δ₁δ2)λ2 + α₂(1 — δ₁)(1 + δ₂)]
(1 — δ1δ2)λ2

and the equilibrium payoffs are as follows:

(1 — δ2)[λ2(1 — δ1δ2) + α₂(1 + δ₂)(1 — δ1) + α1δ1λ1λ2]
λ2(1 — δ1δ2)

δ2[λ2(1 — δ1δ2) + α2δ2(1 — δ₁)]

1 — δ1δ2

19

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