Abstract:
Since 2003, the United States and North Korea have been at odds over the
creation and continuation of a North Korean nuclear weapons program. While
North Korea lobbies strongly for these differences to be sorted out through
bilateral negotiations between the two nations, the United States refuses to
partake in any negotiations other than the multilateral Six-Party Talks. Seeking
to determine if the bargaining framework (bilateral or multilateral) between
several economic agents might grant one or more agents a strategic advantage, we
developed a three-player bargaining model for both a single multilateral
negotiation and for a series of bilateral negotiations involving all three players.
We also included in our model “conflict coefficients” which can simulate
disagreement erupting into damaging conflict between two players. Hence, our
model can further simulate nations on the brink of armed conflict, companies at
risk of entering a price war, or other scenarios where players might cause a
decrease in each other’s initial wealth or utility. Conflict coefficients were
designed in such a way that they can be removed from the model effortlessly to
attain more general results. We concluded that there are indeed strategic
advantages and disadvantages of multilateral and bilateral bargaining games for
each player depending on their disagreement points and the surpluses being
divided. In cases of conflict bargaining, expected payoffs for each player and
preferred bargaining framework are further affected by their own conflict
coefficient and those of the other players.
