Houba, H. and Wen, Q. (2006). Different Time Preferences and Non-Stationary Contracts in Negotiations Economics Letters, 91:273--279.
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Affiliated author
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Publication year2006
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JournalEconomics Letters
When time preferences differ, non-stationary contracts strictly dominate stationary contracts. The unique equilibrium converges to the Nash bargaining solution in which the less patient player always receives 50% of his utopia payoff, regardless of the difference between the players' discount rates. {\textcopyright} 2005 Elsevier B.V. All rights reserved.