Strategic Effects and Incentives in Multi-issue Bargaining Games



ag2 xe1 as defined in (60) in agenda 2. Then, as for the previous case, player 1 prefers
agenda 1 while player 2 prefers agenda 2. ■

In conclusion, as in the case of side payments (Flamini, 2001) when there is a dif-
ficult/urgent issue parties prefer to postpone it and enjoy an initial agreement rather
than to compromise the entire negotiation process by setting the most difficult/urgent
issue first.

References

Busch, L.A. and Horstmann, I.J. (1997): Bargaining Frictions, Bargaining Pro-
cedures and Implied Costs in Multi-issue Bargaining, Economica 64, 669-80.

Busch, L.A. and Horstmann, I.J. (1999): Endogenous Incomplete Contracts: A
Bargaining Approach, Canadian Journal of Economics 32, 956-75.

Flamini, F. (2001): Agenda Formation in Issue-by-Issue Bargaining Games.
Discussion paper 01-19 Department of Economics University of Glasgow.

In, Y. and Serrano, R. (2002): Agenda Restrictions in Multi-Issue Bargaining.
forthcoming in Journal of Economic Behavior and Organization.

In, Y. and Serrano, R. (2003): Agenda Restrictions in Multi-Issue Bargaining

II: Unrestricted Agendas. Economics Letters 79, p.325-331.

33



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