Finite horizon bargaining with outside options and threat points

We characterize equilibrium behavior in a finite horizon multiple-pie alternating offer bargaining game in which both agents have outside options and threat points. In contrast to the inifinite horizon case the strength of the threat to delay agreement is non-stationary and decreases over time. Typically the delay threat determines proposals in early periods, while the threat to opt out characterizes those in later ones. Owing to this non-stationarity both threats may appear in the equilibrium shares agreed upon. When the threat to opt out is empty for both agents, the outcome corresponds exactly with the (generalized) Nash bargaining solution. The latter observation may prove useful for designing experiments that are meant to test economic models that include a bargaining stage.