On the Non-Cooperative Foundations of Cooperative Bargaining

Abstract

In this note we challenge the non-cooperative foundations of cooperative bargaining solutions on the grounds that the limit operation for approaching a frictionless world is not robusto We show that when discounting almost ceases to play a role, any individually rational payoff can be supported by some subgame perfect equilibrium. To select the "correct" point imposes excessive informationaL requirements on the analyst.Subgame Perfection Rubinstein Game