Conflict Leads to Cooperation in Nash Bargaining

Kareen Rozen
Brown University – Department of Economics

June 26, 2009

Cowles Foundation Discussion Paper No. 1641
Yale Economics Department Working Paper No. 39

Abstract:

We consider a multilateral Nash demand game where short-sighted players come to the bargaining table with requests for both coalition partners and the potentially generated resource. We prove that group learning leads with probability one to complete cooperation and a strictly self-enforcing allocation (i.e., in the interior of the core). Highlighting group dynamics, we demonstrate that behaviors which appear destructive can themselves lead to beneficial and strictly self-enforcing cooperation.

Conflict Leads to Cooperation in Nash Bargaining