Conflict leads to cooperation in demand bargaining

We consider a multilateral Nash demand game in which short-sighted players come to the bargaining table with requests for both coalition partners and the potentially generated resource. We prove that the resulting process converges with probability one to a state in which all players agree on a strictly self-enforcing division of resources (i.e., a strict core allocation). Highlighting group dynamics, we show how the myopic actions of players may lead to the break up of groups in the short run, but can ultimately bring about a situation from which a strictly self-enforcing allocation can be reached.

► Study a multilateral Nash demand game where players request both coalition partners and an amount of resource.
► Learning leads with probability one to complete cooperation and a strictly selfenforcing allocation.
► Exhibit a dynamic process where the break up and reformation of coalitions leads to a strictly self-enforcing outcome.