Stakeholder bargaining games

Abstract

We study bilateral bargaining problems with an interested third party, the stakeholder, that enjoys benefits upon a bilateral agreement. To address the strategic implications of stakeholders over negotiations, we consider a model where two bargainers interact in the presence of a third party that (a) can transfer a share of her benefits to the bargainers but cannot receive a share of the bilateral surplus, and (b) while she may not participate in all periods of the negotiation, she cannot remain entirely inhibited. Our main findings are (1) that the stakeholder's (reverse) liquidity constraint implies the existence of a multiplicity of stationary subgame perfect equilibria that include outcomes with very asymmetric bilateral agreements, and (2) that the partial participation of the stakeholder may be the source of severe inefficiency.JEL classification: C78.

The role of mediation in peacemaking and peacekeeping negotiations

“…This means that the agents will suffer one round of damages (with costs (1 − δ) c for player 1 and 0 for player 2) and will continue negotiating under a peacemaking environment. 6 Then, the actual value of the outside option is: 7…”

“…. 6 We assume that there is no delay in the start of the negotiations after the conflict breaks out. This allows us to eliminate a purely artificial source of equity given by discounting (that reduces the present value of the differences in payoffs across agents).…”