Alternating-Offers Bargaining Under One-Sided Uncertainty on Deadlines

Alternating-offers is the most prominent negotiation protocol for automatic bilateral bargaining. Nevertheless, in most settings it is still not known how two fully rational agents should behave in the protocol. In this paper we study the finite-horizon alternating-offers protocol under one-sided uncertain deadlines. We make a novel use of backward induction in studying bargaining with uncertainty; we employ a “natural” system of beliefs and find, when it exists, the pertinent pure strategy sequential equilibrium. We further show, as an intrinsic limitation of the protocol, that for some parameter values there is no pure strategy sequential equilibrium, whatever system of beliefs is employed.