A projected gradient dynamical system modelling the dynamics of bargaining

DOI10.1080/10236198.2011.623699zbMATH Open1278.91082arXiv1105.1767OpenAlexW2055652667MaRDI QIDQ4908671FDOQ4908671

Authors: Alberto Pinto, S. Z. Xanthopoulos, D. Pinheiro, Athanasios Yannacopoulos 

Publication date: 6 March 2013

Published in: Journal of Difference Equations and Applications (Search for Journal in Brave)

Abstract: We propose a projected gradient dynamical system as a model for a bargaining scheme for an asset for which the two interested agents have personal valuations which do not initially coincide. The personal valuations are formed using subjective beliefs concerning the future states of the world and the reservation prices are calculated using expected utility theory. The agents are not rigid concerning their subjective probabilities and are willing to update them under the pressure to reach finally an agreement concerning the asset. The proposed projected dynamical system, on the space of probability measures, provides a model for the evolution of the agents beliefs during the bargaining period and is constructed so that agreement is reached under the minimum possible deviation of both agents from their initial beliefs. The convergence results are shown using techniques from convex dynamics and Lyapunov function theory.

Full work available at URL: https://arxiv.org/abs/1105.1767

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zbMATH Keywords

penalized optimization problembargaining dynamicsdiscrete-time projected dynamical systems

Mathematics Subject Classification ID

Nonlinear programming (90C30) Auctions, bargaining, bidding and selling, and other market models (91B26) Sensitivity, stability, parametric optimization (90C31) Dynamical systems in optimization and economics (37N40) Microeconomic theory (price theory and economic markets) (91B24)

Cites Work

• The bargaining problem
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• Perfect Equilibrium in a Bargaining Model
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• An Introduction to Variational Inequalities and Their Applications
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• Other Solutions to Nash's Bargaining Problem
• Further results on global convergence and stability of globally projected dynamical systes
• On the stability of globally projected dynamical systems
• Behavioural and dynamical scenarios for contingent claims valuation in incomplete markets

Cited In (2)

• On a variational sequential bargaining pricing scheme
• Contingent claim pricing through a continuous time variational bargaining scheme

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