Sequential versus independent commitment

Abstract

Rational bargaining behavior depends crucially on the rules of bargaining, especially on whether parties decide sequentially or independently. Whereas in ultimatum bargaining the proposer can exploit the responder, independent commitments result in more balanced payoffs. To limit the scope of possible bargaining results we try to rule out certain bargaining rules. In our indirect evolutionary analysis we first determine the solution for all possible rule constellations and then derive the evolutionary stable rules of bargaining. It is shown that ultimatum bargaining requires considerable, but non-maximal uncertainty about the size of the pie, i.e. the monetary amount to be distributed.