Credible Threats in Negotiations

The game-theoretic modelling of negotiations has been an active research area for the past five decades, that started with the seminal work by Nobel laureate John Nash in the early 1950s. This book provides a survey of some of the major developments in the field of strategic bargaining models with an emphasize on the role of threats in the negotiation process. Threats are all actions outside the negotiation room that negotiators have ate their disposal and the use of these actions affect the bargaining position of all negotiators. Of course, each negotiator aims to strengthen his own position. Examples of threats are the announcement of a strike by a union in centralized wage bargaining, or a nation's announcement of a trade war directed against other nations in negotiations for trade liberalization. This book is organized on the basis of a simple guiding principle: The situation in which none of the parties involved in the negotiations has threats at its disposal is the natural benchmark for negotiations where the parties can make threats. Also on the technical level, negotiations with variable threats build on and extend the techniques applied in analyzing bargaining situations without threats. The first part of this book, containing chapter 3-6, presents the no-threat case, and the second part, containing chapter 7-10, extends the analysis for negotiation situations where threats are present. A consistent and unifying framework is provided first in 2.
About the Author: Harold Houba is economist at the Centre of World Food Studies, Vrije Universiteit in Amsterdam. He was educated at Tilburg University, both Masters and Ph.D. and has been Assistant Professor of Economic Theory for about ten years at the department of Econometrics and Operations Research at the Vrije Universiteit. The list of topics published include Bargaining Theory and Game Theory, among other topics, in journals as European Economic Review, Economic Theory, Journal of Mathematical Economics and Journal of Economic Dynamics and Control. Wilko Bolt is economist at the Research Department of De Nederlandsche Bank in Amsterdam. He was educated at the Vrije Universiteit in Amsterdam, both Masters and Ph.D., and joined De Nederlandsche Bank afterwards. The list of topics published include Bargaining Theory and Monetary Economics among other topics, in journals as American Economic Review, European Economic Review and Economic Theory.