Institute of Economic Research, Seoul National University
Abstract
We study a strategic bargaining model where two groups of
individuals first choose their representatives, who then bargain
with each other using a standard alternating-offer protocol, and
then the shares of the members of a group are determined by a
similar n-person bargaining process within the group. We show
that there exists a unique perfect equilibrium outcome of this
three-stage game when the breakdown probabilities of both the
inter-group bargaining and intra-group bargaining are small. In
equilibrium, each group selects as its representative an individual
who has the greatest marginal gain from increasing the groups
share
