Alternating Offer Bargaining with Endogenous Information*

Department of Economics Alternating-offer Bargaining with Two-sided Incomplete Information

Backward Induction or Forward Reasoning? - an Experiment of stochastic Alternating offer bargaining

Bounded rationality questions backward induction, which however, does not exclude such reasoning when anticipation is easy. In our stochastic (alternating offer) bargaining experiment, there is a certain first-period pie and a known finite deadline. What is uncertain (except for the final period) is whether there is a further period. Whereas backward induction requires information about all lat...

Relative Concerns and Delays in Bargaining with Private Information

We consider Rubinstein’s two-person alternating-offer bargaining model with two-sided incomplete information. We investigate the effects of one party having relative concerns about the bargaining outcome and the delay in reaching an agreement. We find that facing an opponent with stronger relative concerns only hurts the bargainer when she is stronger than her opponent. In addition, we show tha...

Cramton Strategic Delay in Bargaining

The role of strategic delay is analyzed in an infinite-horizon alternating-offer model of bargaining. A buyer and seller are engaged in the trade of a single object. Both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly. An equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by...

Bargaining with endogenous information

This paper analyses information acquisition in ultimatum bargaining with common values. Because of an endogenous lemons problem the equilibriumpayoffs of the agents are non-monotonic in the information cost. The mere possibility of information acquisition can cause no trade although the agents maintain symmetric information in equilibrium and the gain from trade is common knowledge. The agent r...