INTRANSIGENCE IN NEGOTIATIONS - THE DYNAMICS OF DISAGREEMENT

Three-party negotiations are analyzed in which the players are able not only to rank alternatives but also have a preference for impasse. In a dynamic model, players progressively invoke fallback positions to try to prevent inferior outcomes from being implemented in a game of incomplete information. A player's intransigence, or unwillingness to retreat to fallback positions, generally works to his or her advantage. Greater size-or, equivalently, an enhanced ability to effect preferred outcomes-also helps, but intransigence is a potent force by itself. In fact, intransigence may prevail despite the fact that there is a so-called Condorcet alternative that could defeat it and all other alternatives. The analysis illuminates the rational basis of disagreement and why it develops in the manner it does. Extensions of the dynamic model are discussed, including making the preferences of the players for impasse endogenous.