ENDOGENEITY OF ALTERNATING OFFERS IN A BARGAINING GAME

We investigate an infinite horizon two-person simultaneous move bargai ning game with incomplete information and discounted payoffs. The game takes the form of a concession game: in each period, each player choo ses to give in or hold out. The game continues until at least one of t he players chooses to give in, at which point agreement has been reach ed and the game terminates. For any discount factor, if the players' p riors about each other's type are sufficiently asymmetric, there is a unique Nash equilibrium in which the two players alternate in their wi llingness to give in. (C) 1997 Academic Press.