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Rubenstein Bargaining Model

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PPGPortal > Home > Concept Dictionary > R > Rubenstein Bargaining Model
 

Rubenstein Bargaining Model 

A model that is used to study bargaining. Rubenstein bargaining considers a sequence of choices and solves for the sub-game perfect equilibrium at each stage.

(Dwayne Benjamin, Toronto PPG 1002H)

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The Rubenstein model suggests that the costs of delay, combined with forward-looking rationality, leads parties to equilibrium. The implication of Rubenstein bargaining is that rational parties will be able to come to agreements without delay. This model is obviously not perfectly applicable to the real world, as evidenced by the existence of strikes and labour disruptions. Many economists suggest that imperfect information is the principal reason that inefficient disputes, such as strikes, occur when parties are negotiating in the real world.

     

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