Daniel Luo, Northwestern University -- This paper studies “two-stage” perfect information dynamic bargaining. In the first stage, players cannot split surplus, but only agree whether or not to proceed to the second stage, where canonical Rubinstein bargaining occurs. Bargaining power is realized both through an exogenously evolving state variable and an endogenous choice of one player (the activist) to destroy some share of the other player’s (the government) surplus in a costly fashion. This second-order framework formalizes the intuition offered by activists during interviews that rioting is a justified response to repeated state ignorance of their movements and demands as a way to force engagement and secure a “seat at the table.”
