Strategic Effects and Incentives in Multi-issue Bargaining Games



Abstract

The focus of the paper is on issue-by-issue bargaining procedures in which parties
are allowed to differ not only in their valuations of the issues but also in their rates
of time-preference. We show that the interplay of the forces in the bargaining game
is complex and standard assumptions in the literature, such as a common discount
factor, can be strong. We investigate the SPE of the game when the order of the issues
can be changed and show that parties can have the same preferences over agendas
when they both agree over the importance of an issue or when they disagree (if corner
solutions are allowed and/or there is a difficult/urgent issue).

JEL Classification: C72, C73, C78.

Key words: Agenda, Bargaining, Subgame Perfect Equilibrium.



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