Bargaining with exit threat

Official URL: http://192.168.1.20/record=b1500494 (Table of Contents)

We study the effects of exit threat in continuous two person bargaining games. Players try to establish reputation of being irrational type who never accepts an offer below his demand and exits the game at the time he announced in the beginning of the game. We show that a player becomes advantageous if he is able to threaten with exit time compared to the case where no one can choose exit time. However, this advantage becomes smaller if his opponent can also choose exit time to threaten. Moreover, we show that whether players can choose exit time or not, a player's payoff is decreasing with his discount rate and the initial probability of his opponent's irrationality and increasing with the discount rate of his opponent and the initial probability of his irrationality. In this thesis we use Matlab program for computation. Detailed information and program codes can be found in the file named codes.