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Strategic Delay in Bargaining with Two-Sided Uncertainty

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  • Cramton, Peter C

Abstract

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 delaying prior to making an offer. A bargainer expecting large gains from trade is more impatient than one expecting small gains and, hence, makes concessions earlier on. Trade occurs whenever gains from trade exist, but only after costly delay. Copyright 1992 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): 59 (1992)
Issue (Month): 1 (January)
Pages: 205-25

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Handle: RePEc:bla:restud:v:59:y:1992:i:1:p:205-25

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