The Game of Negotiations: Ordering Issues and Implementing Agreements

In this paper, we study a two issue bargaining situation allowing for an endogenous determination of the agenda under alternative rules for implementing agreements. We uncover the settings in which different agenda structures will be employed in equilibrium, how the order in which issues are bargained over matters, and what impact the rules for implementing agreements have. We find that, if agreements are implemented as they are reached, "easy" issues are negotiated first and "hard" issues later; if agreements are implemented only after all issues are settled, then it is only the size of the surplus that determines order, with large issues settled first. We also show that all parties prefer the former rules of implementation to the letter.