COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

Lux et veritas

COWLES FOUNDATION DISCUSSION PAPER NO. 1641

Conflict Leads to Cooperation in Nash Bargaining

Kareen Rozen

March 2008

We consider a Nash demand game where N players come to the bargaining table with requests for coalition partners and a potentially generated resource. We show that group learning leads to complete cooperation and an interior core allocation with probability one. Our arguments highlight group dynamics and demonstrate how destructive group behaviors — exclusion, divide and conquer tactics, and scapegoating — can propel groups toward beneficial and self-enforcing cooperation.

Keywords: Nash bargaining, Learning, Core, Group conflict

JEL Classification: C7