Advertisement
Published in:
2012 | OriginalPaper | Chapter
Recursive Bargaining with Dynamic Accumulation
Author : Francesca Flamini
Published in: Distributed Decision Making and Control
Publisher: Springer London
Activate our intelligent search to find suitable subject content or patents.
Select sections of text to find matching patents with Artificial Intelligence. powered by
Select sections of text to find additional relevant content using AI-assisted search. powered by
We study a bargaining game (á la Rubinstein) in which parties are allowed to invest part of an available surplus. Therefore, in addition to the standard problem of how to divide a surplus for their own consumption, parties face the additional problem of how much to invest, knowing that the level of investment affects the surplus available in the next period. We provide an algorithm to solve the game when the number of bargaining stages is finite but tends to infinity.We show that the equilibrium investment and consumption shares become independent of the capital stock. The convergence of the equilibrium demands is affected by the elasticity of substitution and parties’ patience.