ODD MAN OUT - THE PROPOSAL-MAKING MODEL

The proposal-making model is applied to the class of three-player/thre e-cake problems. The set of subgame perfect equilibria (SPEs) and the limit set of SPE payoffs as the risk of breakdown vanishes is characte rized. The necessary and sufficient condition for uniqueness is derive d, The results for the alternating offer model play an important role. The model always admits one stationary SPE and this equilibrium is re lated to a multilateral Nash solution. The stationary SPE is the coali tion-proof SPE and the limit result differs from the result known for the model without risk of breakdown. (C) 1997 Elsevier Science S.A.