Uncertainty and Delay in Bargaining
AbstractThis 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 InfoArticle provided by Wiley Blackwell in its journal Review of Economic Studies.
Volume (Year): 57 (1990)
Issue (Month): 4 (October)
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