Based on classic and recent articles, we discuss the development of game theoretic tools to analyze economic issues related to bargaining and network analysis. In that part on bargaining, strategic bargaining models of bilateral negotiations and endogenous threats (e.g. strikes or trade wars) are discussed. Several strategic bargaining models support well-known solutions in cooperative or axiomatic bargaining theory. The extension to multilateral negotiations of coalition formation with externalities is made to study endogenous coalition formation and the division of the gains from cooperation.
Time permitting, experimental studies of bargaining models are discussed. Cooperative solution concepts are also applied to explain endogenous coalition formation. In the part on network theory, game theoretic tools to analyze economic and social networks are introduced. We discuss allocation rules for various types of networks. Main attention will be given to communication networks and hierarchies. Finally, we apply these allocation rules to economic allocation problems with an implicit or explicit network structure such as water allocation, sequencing, assignment and auction games.
- OR: Osborne and Rubinstein (1990). Bargaining and Markets. Academic Press. Free downloadable from: https://www.economics.utoronto.ca/osborne/
- HB: Houba and Bolt (2002). Credible Threats in Bargaining from: A Game Theoretic Approach. Theory and Decision Library. Series: C: Game Theory Mathematical programming and Operations Research, vol. 32. Kluwer Academic, Norwell, Mass (US).
- Selected papers (will be announced during the course).