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Unobserved-Offers Bargaining

Author

Listed:
  • Alexander Wolitzky

Abstract

I study ultimatum bargaining with imperfectly observed offers. Imperfectly observed offers must be rejected with positive probability, even when the players' preferences are common knowledge. Noisier observations imply a greater risk of rejection. In repeated ultimatum bargaining, the responding party can obtain a positive payoff if his signal of the opponent's offer is also observed by the opponent herself, but not if his signal is private. In alternating-offers bargaining, a player is better off when her own offers are observed more precisely and her opponent's offers are observed less precisely. Possible applications include international relations, regulation, principal-agency, and product quality provision.

Suggested Citation

  • Alexander Wolitzky, 2023. "Unobserved-Offers Bargaining," American Economic Review, American Economic Association, vol. 113(1), pages 136-173, January.
    • Handle: RePEc:aea:aecrev:v:113:y:2023:i:1:p:136-73
    DOI: 10.1257/aer.20211524
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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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