Nir Dagan / Teaching

Bargaining

Universitat Pompeu Fabra, 1995/6 and 1996/7

• General Description
• Major Textbooks
• Outline of the Course
• Exercises

General Description

The course discusses game theoretic models of bargaining. Both the cooperative and the non-cooperative approaches are considered. The Nash bargaining problem and Rubinstein's alternating offers model will be the main representatives of the the two approaches respectively. Emphasis will be put on modelling and theoretical issues, rather than on applications.

No prior knowledge of game theory is required in order to participate. Most of the material appears in the first part of the book Bargaining and Markets by Osborne and Rubinstein.

Major Textbooks

• Martin J. Osborne and Ariel Rubinstein, Bargaining and Markets, Academic Press, San Diego CA, 1990.
• Martin J. Osborne and Ariel Rubinstein, A Course in Game Theory, MIT Press, Cambridge MA, 1994.

Outline of the Course

The course will cover most of Part 1 of Bargaining and Markets. The book A Course in Game Theory will be used for providing the necessary game-theoretic background, i.e. articles 3 and 4 below; other game-theory textbooks may also be used for this purpose.

1. Introduction: game theoretic modelling of economic situations.
2. The coalitional (cooperative) approach: Nash's bargaining problem and solution.
3. Strategic form games: Nash equilibrium.
4. Extensive form games: Nash equilibrium and subgame perfect equilibrium.
5. The strategic (non-cooperative) approach: Rubinstein's alternating offers bargaining game.
6. Relations between the two approaches.