Bargaining with Absentmindedness
Abstract
Delay is the norm in bargaining. I propose a novel source of bargaining delay: absentmindedness. Instead of interpreting absentmindedness as a literal memory friction, I use absentmindedness to represent a broader form of bounded rationality in dynamic games where players cannot perfectly track a game's progression. Bargainers unable to finely condition play on the stage of dynamic interaction can credibly refuse last-minute ultimatums. Other parties that anticipate this behavior are driven to offer preemptive concessions to avoid a breakdown in negotiations. Absentmindedness is thus a source of bargaining power, even for players who never make offers. This bargaining power comes at the cost of efficiency; I show that there can be equilibria where offers are rejected on the path of play.
Cite
@article{arxiv.2509.05828,
title = {Bargaining with Absentmindedness},
author = {Cole Wittbrodt},
journal= {arXiv preprint arXiv:2509.05828},
year = {2026}
}