On Rationalizability in Two-Person Alternating-Offer Bargaining
Vannetelbosch, Vincent J.
This paper reconsiders Rubinstein's alternating-offer bargaining game with complete information. We define rationalizability for multi-stage games with observed actions. Whe show that rationalizability does not exclude perpetual disagreement or delay. Then, we define trembling-hand rationalizability and we show that it implies a unique solution. Moreover, this unique solution is the subgame perfect equilibrium. We also reconsider an extension of Rubinstein's game wherein there is a smallest money unit.
bargaining; alternating-offer; rationalizability; money unit
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