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Bargaining with Two-Sided Incomplete Information: An Infinite Horizon Model with Alternating Offers

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  • Chatterjee, Kalyan
  • Samuelson, Larry
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    Abstract

    This paper examines an infinite-horizon bargaining model, incorporating two-sided incomplete information, uncertainty concerning the potential gains from trade, an illumination of interesting qualitative bargaining issues, and plausible equilibria. These features have powerful implications. A Nash equilibrium exists, and is generically both unique and sequential. Comparative static implications of variations in the game's specifications are developed. The authors find that natural indications of bargaining strength emerge from the model, and establish the intuitive result that an increase in a player's relative bargaining strength makes that player more likely to capture the gains from bargaining. Copyright 1987 by The Review of Economic Studies Limited.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Review of Economic Studies.

    Volume (Year): 54 (1987)
    Issue (Month): 2 (April)
    Pages: 175-92

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    Handle: RePEc:bla:restud:v:54:y:1987:i:2:p:175-92

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    Cited by:
    1. Luca Anderlini & Leonardo Felli, 1998. "Costly Bargaining and Renegotiation - (Now published in Econometrica, 69(4) (March 2001), pp. 377-411.)," STICERD - Theoretical Economics Paper Series 361, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    2. Xavier Jarque & Clara Ponsat?Author-Name: Jozsef Sakovics, 2001. "Mediation: Incomplete information bargaining with," UFAE and IAE Working Papers 502.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    3. Andrzej Skrzypacz & William Fuchs, 2007. "Bargaining with Arrival of New Traders," 2007 Meeting Papers 186, Society for Economic Dynamics.
    4. Moon, Yongma & Yao, Tao & Park, Sungsoon, 2011. "Price negotiation under uncertainty," International Journal of Production Economics, Elsevier, vol. 134(2), pages 413-423, December.
    5. Dilip Abreu & Rajiv Sethi, 2001. "Evolutionary Stability in a Reputational Model of Bargaining," Game Theory and Information 0103001, EconWPA.
    6. McKelvey, Richard D. & Palfrey, Thomas R., 1997. "Endogeneity of Alternating Offers in a Bargaining Game," Journal of Economic Theory, Elsevier, vol. 73(2), pages 425-437, April.
    7. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-52, March.
    8. Kaya, Ayça & Liu, Qingmin, 0. "Transparency and price formation," Theoretical Economics, Econometric Society.
    9. David P. Myatt, 2005. "Instant Exit from the Asymmetric War of Attrition," Economics Series Working Papers 160, University of Oxford, Department of Economics.
    10. Philip Bond & Hülya Eraslan, 2004. "Strategic Voting over Strategic Proposals, Second Version," PIER Working Paper Archive 07-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 02 Jan 2007.
    11. Ponsati, Clara & Sakovics, Jozsef, 1995. "The war of attrition with incomplete information," Mathematical Social Sciences, Elsevier, vol. 29(3), pages 239-254, June.
    12. D. Abreu & D. Pearce, 1999. "A Behavioral Model of Bargaining with Endogenous Types," Princeton Economic Theory Papers 00s15, Economics Department, Princeton University.
    13. Peter Cramton, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Papers of Peter Cramton 92res, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
    14. Dilip Abreu & David Pearce, 2003. "A Behavioral Model of Bargaining with Endogenous Types," Cowles Foundation Discussion Papers 1446, Cowles Foundation for Research in Economics, Yale University.
    15. Anita Gantner, 2007. "Bargaining, Search, and Outside Options," Working Papers 2007-16, Faculty of Economics and Statistics, University of Innsbruck.
    16. Rami Zwick & Ching Chyi Lee, 1999. "Bargaining and Search: An Experimental Study," Experimental 9902003, EconWPA.
    17. Peter C. Dawson & Stephen M. Miller, 2000. "Transfer Pricing in the Decentralized Multinational Corporation," Working papers 2000-06, University of Connecticut, Department of Economics.
    18. Adriana Cassoni, 1997. "A brief survey on the role of trade unions in labour market," Documentos de Trabajo (working papers) 0697, Department of Economics - dECON.

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