Mediation and the Nash bargaining solution

Part of the Studies in Economic Design book series (DESI)


This paper analyzes a model of bargaining in which two parties use a mediator who sequentially makes random proposals until agreement by both parties is reached. I show that as the cost of delay shrinks to zero, the subgame perfect payoff converges to the asymmetric Nash bargaining solution with weights determined by the relative discount rates of the players. I also establish conditions for the uniqueness of the subgame perfect equilibrium for arbitrary discount rates.


Discount Rate Discount Factor Subgame Perfect Equilibrium Nash Bargaining Solution Discount Payoff 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Binmore, K., Rubinstein, A., Wolinsky, A. (1986) The Nash bargaining solution in economic modelling. Rand Journal of Economics 17: 176–188CrossRefGoogle Scholar
  2. Blackwell, D. (1965) Discounted dynamic programming. RAnnals of mathematical Statistics 36: 226235Google Scholar
  3. Merlo, A., Wilson, C. (1995) A stochastic model of sequential bargaining with complete information. Econometrica 63: 371–399CrossRefGoogle Scholar
  4. Nash, J (1953) Two person cooperative games. Econometrica 21: 128–140Google Scholar
  5. Rubinstein, A. (1982) Perfect equilibrium in a bargaining model. Econometrica 50: 97–109CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  1. 1.Department of EconimicsNew York UniversityNew YorkUSA

Personalised recommendations