A Dynamic Multi-Player Bargaining Game with Veto Players

Abstract

This paper studies the effect of veto right on players’ income in multi-player dynamic bargaining game. Based on a basic multi-person dynamic bargaining model generalized by the Rubinstein’s two-person alternating-offer bargaining model, the authors construct a dynamic multi-player bargaining game with veto players by adding a constraint to its negotiation process, which is obtained by studying the influence of exercising the veto right exercised by veto players. The authors emphatically describe the strategic game form of this dynamic bargaining game and study its equilibrium, then we analyze the relationship between the minimum acceptable payoff of the veto players and the equilibrium income. The research shows that veto right may increase the benefits of veto players and decrease the benefits of non-veto players. Veto players will not affect the players’ benefits and the form of equilibrium when the minimum acceptable payoff of every veto player is relatively low. When the minimum acceptable payoff of the veto player is high enough, he can only get the minimum acceptable payoff, and his benefit increases as his minimum acceptable payoff increases. In this case, the veto player has intention to obtain more resources by presenting a higher minimum acceptable payoff.