The Effects of Third-Party Transfers in Sequential Anchored Bargaining

We analyze a bargaining game where an anchor player bargains sequentially with n non-anchor players over the division of a pie in the presence of third-party transfers and show that there exists a unique perfect equilibrium. In the case where third-party transfers are lump-sum, the transfers are jointly shared by all players, while in the case where transfers are proportional to the players' shares, a transfer affects only the party that is obliged to make the transfer, and the anchor player and each non-anchor player bargain as if there is no further bargaining. It turns out that the anchor player and the last non-anchor player are in the most disadvantageous position with our bargaining protocol