Abstract
Does a noncooperative equilibrium point necessarily lead to a Pareto efficient outcome in a supergame if binding agreements on actions are possible among players? We present a two-person repeated bargaining game in which players can negotiate for a long-term contract on their actions in the supergame model. We show that a subgame perfect equilibrium point of our game necessarily leads to a Pareto efficient outcome if the equilibrium strategies for both players have zero-memory. We also point out that the question above is answered negatively if the equilibrium strategies for players have complete memory.
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© 1991 Springer-Verlag Berlin Heidelberg
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Okada, A. (1991). A Two-Person Repeated Bargaining Game with Long-Term Contracts. In: Selten, R. (eds) Game Equilibrium Models III. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-07367-4_4
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DOI: https://doi.org/10.1007/978-3-662-07367-4_4
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-08110-1
Online ISBN: 978-3-662-07367-4
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