Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Two deviations of alternating-offer bargaining behavior from economic theory are observed together, yet have been studied separately. Players who could secure themselves a large surplus share if bargainers were purely self-interested incompletely exploit their advantage. Delay in agreement occurs even if all experimentally controlled information is common knowledge. This paper rationalizes both...

Bargaining under Incomplete Information

Uncertainty about Uncertainty and Delay in Bargaining

We study a one-sided offers bargaining game in which the buyer has private information about the value of the object and the seller has private information about his beliefs about the buyer. We show that this uncertainty about uncertainties dramatically changes the set of possible outcomes when compared to two-sided private information. In particular, higher order beliefs can lead to a delay in...

Envy can promote more equal division in alternating-offer bargaining

Bargainers in an open-ended alternating-offer bargaining situation may perceive envy, a utility loss caused by receiving the smaller share that is modeled in some social preferences in addition to self-interest. I extend Rubinstein (1982)’s original solution of the bargaining problem for two self-interested bargainers to this strategic situation. Bargainers still reach agreement in the first pe...

Bargaining and Conflict with Incomplete Information

This paper studies bargaining and conflict under incomplete information, provides an overview and a critical account of the literature on the topic and contributes with original research. We first revise models of mechanism design and sequential bargaining that take confrontation as final. Conflict and inefficiencies are to be expected in these models whenever parties have optimistic prospects ...