A Non-cooperative Bargaining Model with Strategically Timed Offers

Abstract Rubinstein′s alternating-offers bargaining model is enriched by allowing players to choose when and whether or not to make an offer. Time is continuous and players make offers whenever they wish. It is assumed that upon making an offer, players must wait a fixed amount of time before making another. It is shown that if players can react arbitrarily quickly to their opponent′s offers, then all subgame perfect equilibrium outcomes are Rubinstein-like, in particular, efficient. However, if it takes time to react, then some delay can be supported. This potential delay becomes arbitrarily large as reaction times increase. Journal of Economic Literature Classification numbers: C78, C72.