On the sustainability of bargaining solutions in f

Authors: Joaquín Andaluz José Alberto Molina

Publish Date: 2007/07/03

Volume: 5, Issue: 4, Pages: 405-418

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Abstract

This paper analyses the sustainability of family bargaining agreements by developing a noncooperative game between two spouses with symmetric preferences To that end we develop by using a general utility function a repeated noncooperative game involving two players with symmetric preferences where the characterization of a Nash subgame perfect equilibrium allows us to demonstrate that the spouse with the greater bargaining power has a greater incentive to reach an agreement This result is also reproduced by using a particular example of linear preferences in consumption However the influence of the bargaining power on the sustainability of a bargaining solution depends on the specification of the individual preferences as well as the degree of altruism between the spousesThis paper was partially written while José Alberto Molina was Visiting Fellow at the Department of Economics of the University of Warwick UK to which he would like to express his thanks for the hospitality and facilities provided The authors would like to express their gratitude for the helpful comments and observations of the anonymous referees of the Journal Similarly they acknowledge the financial support provided by the Spanish Ministry of Science and Technology SEC200201350 and SEJ200506522 as well as by the BBVA Foundation

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