Strategic Effects and Incentives in Multi-issue Bargaining Games



to the value that αi assumes (see Proposition 1 and 2), then we need to consider the
following seven cases:

1) In both agendas the SPE outcome is that player 1 demands the entire surplus
(that is,
αi < min{b, o}). In this case, player 1 prefers agenda 1 (2 respectively) if

(λ1 - 1)(1 - δ1δ2 - α1δ1(1 - δ2))n∕∩        ɪʌ             ∕O9

-------------1 + δ δ-------------- > 0(< 0, respect.)             (32)

while player 2 prefers Agenda 1 if

α2(1 - δ1)(1 - λ2)

----------——------>> > 0(< 0, respect.)                      (33)
1+δ1δ2

At the limit for 0, expression (32) is positive when λ1 > 1. Then both players
prefer the agenda that sets the most important issue first (e.g., agenda 1 if
λ1 > 1
and λ2 < 1).

2) In both agendas the SPE outcome is that player 1 demands the interior solution
of the system of indifference condition (that is,
max{b, o} i < min{g, q}). In this
case, agenda
1 is preferred by player 1 when (34) below is positive and vice-versa
agenda
2 is favoured when (34) below is negative.

/1 л л 22 ʌ [(λ1λ2 - 1)(1 + δ2)α2(1 - δ1) + λ2(λ1 - 1)(1 - δ1δ2 + α1(δ2 - δ1))] (34)
(1 - δ1δ2)2λ2

Similarly, agenda 1 (2) is preferred by player 2 when (35) below is positive (negative,
respectively):

1 2^χ χ 42). [(1 - λ2λ2)(1 + δ1)α1(1 - δ2) + λ1(1 - λ2)(1 - δ1δ2 + α2(δ1 - δ2))] (35)

(1 - δ1δ2)2λ1

21



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