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Uncertainty and Delay in Bargaining

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  • Cho, In-Koo
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    Abstract

    This paper investigates the relationship between uncertainty and delay of agreement in the one-sided offer bargaining model with two-sided uncertainty where the seller makes offers. The author constructs a weak stationary equilibrium in which different types of the seller charge different prices in every period. The author completely characterizes the separating equilibrium by three regularity conditions, and shows that the time interval between offers converges to zero, the seller's initial price offer in a separating equilibrium converges with probability one to the lowest valuation of the buyer if and only if the gain from trading is common knowledge. Copyright 1990 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): 57 (1990)
    Issue (Month): 4 (October)
    Pages: 575-95

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    Handle: RePEc:bla:restud:v:57:y:1990:i:4:p:575-95

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    Cited by:
    1. François Ortalo-Magné & Antonio Merlo, 2002. "Bargaining over Residential Real Estate: Evidence from England," Wisconsin-Madison CULER working papers 02-02, University of Wisconsin Center for Urban Land Economic Research.
    2. Vayanos, Dimitri, 1999. "Strategic Trading and Welfare in a Dynamic Market," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 219-54, April.
    3. William Fuchs & Andrzej Skrzypacz, 2010. "Bargaining with Arrival of New Traders," American Economic Review, American Economic Association, vol. 100(3), pages 802-36, June.
    4. Kaya, Ayça, 2009. "Repeated signaling games," Games and Economic Behavior, Elsevier, vol. 66(2), pages 841-854, July.
    5. Giuseppe Lopomo & Efe A. Ok, 1998. "Bargaining, Interdependence, and the Rationality of Fair Division," Working Papers 98-13, New York University, Leonard N. Stern School of Business, Department of Economics.
    6. Cramton, Peter C, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 205-25, January.
    7. Hsieh, Chang-Tai, 2000. "Bargaining over reform," European Economic Review, Elsevier, vol. 44(9), pages 1659-1676, October.
    8. Abreu, Dilip & Pearce, David G. & Stacchetti, Ennio, 0. "One-sided uncertainty and delay in reputational bargaining," Theoretical Economics, Econometric Society.
    9. Feinberg, Yossi & Skyzypacz, Andrzej, 2002. "Uncertainty about Uncertainty and Delay in Bargaining," Research Papers 1765, Stanford University, Graduate School of Business.
    10. Jarque, Xavier & Ponsati, Clara & Sakovics, Jozsef, 2003. "Mediation: incomplete information bargaining with filtered communication," Journal of Mathematical Economics, Elsevier, vol. 39(7), pages 803-830, September.
    11. 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.
    12. Toxvaerd, Flavio, 2010. "Dynamic Limit Pricing," CEPR Discussion Papers 8104, C.E.P.R. Discussion Papers.
    13. Dang, Tri Vi, 2008. "Bargaining with endogenous information," Journal of Economic Theory, Elsevier, vol. 140(1), pages 339-354, May.
    14. Ilwoo Hwang, 2013. "A Theory of Bargaining Deadlock," PIER Working Paper Archive 13-050, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    15. 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).
    16. D. Abreu & D. Pearce, 1999. "A Behavioral Model of Bargaining with Endogenous Types," Princeton Economic Theory Papers 00s15, Economics Department, Princeton University.

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