Sequential bargaining with common values: The case of bilateral incomplete information∗
نویسنده
چکیده
We study the alternating-offers bargaining problem of assigning an indivisible and commonly valued object to one of two players in return for some payment to the other. The players are asymmetrically and imperfectly informed about the object’s value and have veto power over any settlement. There is no depreciation during the bargaining process which involves signalling of private information on both sides. We characterise the perfect Bayesian equilibrium of this game which has a unique outcome under strictly increasing offers. Equilibrium agreement is reached gradually and non-deterministically. The player obtaining the more precise signal appropriates a rent. (JEL C73, C78, D44, D82, J12.
منابع مشابه
An Alternative View of Uncertainty in Bilateral Bargaining Models with Incomplete Information
This paper seeks to analyze the implications of relaxing the assumption of rationality by using incomplete information. Specifically, we want to analyze the implications on the uniqueness and existence of equilibrium when individuals form expectations with different distributions of all possible states. This is done by postulating an alternative view of uncertainty in decision making in economi...
متن کاملMarkets with Bilateral Bargaining and Incomplete Information
We study the relationship between bargaining and competition with incomplete information. We consider a model with two uninformed and identical buyers and two sellers. One of the sellers has a privately-known reservation price, which can either be Low or High. The other seller’s reservation price is commonly known to be in between the Low and High values of the privately-informed seller. Buyers...
متن کاملSequential bargaining mechanisms
A fundamental problem in economics is determining how agreements are reached in situations where the parties have some market power. Of particular interest are questions of efficiency and distribution: • How efficient is the agreement? • How can efficiency be improved? • How are the gains from agreement divided among the parties? Here, I explore these questions in the context of bilateral monop...
متن کاملMarkets with Bilateral Bargaining and Incomplete Information1
We study the relationship between bargaining and competition with incomplete information. We consider a model with two uninformed and identical buyers and two sellers. One of the sellers has a privately-known reservation price, which can either be Low or High. The other sellers reservation price is commonly known to be in between the Low and High values of the privately-informed seller. Buyers...
متن کاملBargaining 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 ...
متن کامل