This is the oldest and the most difficult economic paper I have ever read. And First paper written by Nobel prize economist, Thomas C. Schelling, a expert of game theory.
It was hard to read because when it was written, there was no framework of game theory. In this paper, a situation of bargaining is written in a text without mathematics.
Mainly, it describes a difficulty of efficient bargaining beecause each negotiator has incentive to cheat. In other words, making credibility is impossible. To overcome the difficulty, it is useful to use share value (i.e. culture, religion), third party (=law, cort), separated stage, commitment.
The reason to use separated stage is that, if a negotiation is divided into some parts, a merit from each game becomes lower, and incentive to build credibility becomes bigger because credibility is important for future games. This application can be seen in daily life; amortization, short examination in each class, and so on.
In commitment, weakness is strength. If adversary knows opponent’s constraints, he have to consider the condition because it can not be changed by anyone. It can be say in a abstract game, if one has dominant strategy, he/she get high score because its opponents premise its choice.
I spent reading it for a week… Next time, I will read two days!!!
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