Costless delay in negotiations

P. Jean Jacques Herings*, Harold Houba

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review


We study bargaining models in discrete time with a finite number of players, stochastic selection of the proposing player, endogenously determined sets and orders of responders, and a finite set of feasible alternatives. The standard optimality conditions and system of recursive equations may not be sufficient for the existence of a subgame perfect equilibrium in stationary strategies (SSPE) in case of costless delay. We present a characterization of SSPE that is valid for both costly and costless delay. We address the relationship between an SSPE under costless delay and the limit of SSPEs under vanishing costly delay. An SSPE always exists when delay is costly, but not necessarily so under costless delay, even when mixed strategies are allowed for. This is surprising as a quasi SSPE, a solution to the optimality conditions and the system of recursive equations, always exists. The problem is caused by the potential singularity of the system of recursive equations, which is intimately related to the possibility of perpetual disagreement in the bargaining process.
Original languageEnglish
Pages (from-to)69-93
JournalEconomic Theory
Issue number1
Publication statusPublished - Jul 2022


  • Bargaining
  • Costless delay
  • Existence
  • Stationary strategies
  • Subgame perfect equilibrium


Dive into the research topics of 'Costless delay in negotiations'. Together they form a unique fingerprint.

Cite this