Waiting to settle: Multilateral bargaining with subjective biases

We study multilateral bargaining games where agents disagree over their bar-gaining power. We show that if agents are extremely optimistic, there may be costlydelays in an arbitrarily long finite game but if optimism is moderate, all sufficientlylong games end in immediate agreement. We show that the game with extremeoptimism is highly unstable in the finite-horizon, and we examine the ramificationsof this instability on the infinite-horizon problem. Finally, we consider other votingrules, and show that the majority-rule may be more efficient than the unanimityrule when agents are optimistic.JEL Classification: C72, C78