Evolutionary stability in alternating-offers bargaining games

This paper characterizes modified evolutionarily stable strategies (MESSES) in Rubinstein's alternating-offers, infinite-horizon bargaining game. We show that a MESS causes agreement to be achieved immediately, with neither player willing to delay the agreement by one period in order to achieve the other player's share of the surplus. Each player's share of the surplus is then bounded between the shares received by the two players in the unique subgame-perfect equilibrium of Rubinstein's game. As the probability of a break-down in negotiations becomes small (or discount factors become large), these bounds collapse on the subgame-perfect equilibrium. (C) 1998 Academic Press.