Dynamic negotiation with time-varying Pareto frontier

摘要

This paper examines the monotonicity and the convergence of the stationary subgame perfect equilibria (SPEs) of the alternating offer bargaining processes with time-varying Pareto frontiers. In most real-world negotiations, the pay-off functions to all the parties involved are not fixed. For example, the negotiation for how to protect intellectual property rights between the US and China were affected by the domestic economic situation in the US and also the political situation in China. Such dynamic behavior makes it very difficult to apply a static model to find solution. In this paper, we first introduce a general model to model negotiations with time-varying Pareto frontiers. Then we provide four special cases about how Pareto frontiers change with time to discuss how to use our model to design negotiation strategy. We particularly focus on the monotonicity and convergence of the dynamic SPEs of the alternating offer bargaining process.