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Alternating-Offer Bargaining with Two-Sided Incomplete Information

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Author Info
Watson, Joel

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Abstract

The author studies alternating-offer bargaining games with two-sided incomplete information about the players' discount rates. For both perfect Bayesian equilibrium and a rationalizability-style notion, he characterizes the set of expected payoffs which may arise in the game. The author also constructs bounds on agreements that may be made. The set of expected payoffs is easy to compute and incorporate into applied models. His main result is a full characterization of the set of perfect Bayesian equilibrium payoffs for games in which the distribution over the players' discount rates is of wide support, yet is in a weak sense close to a point mass distribution. The author proves a lopsided convergence result: each player cannot gain from a slight chance that she is a strong type, but the player can suffer greatly if there is a slight chance that she is a weak type. Copyright 1998 by The Review of Economic Studies Limited.

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 65 (1998)
Issue (Month): 3 (July)
Pages: 573-94
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Handle: RePEc:bla:restud:v:65:y:1998:i:3:p:573-94

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ausubel, Lawrence M & Deneckere, Raymond J, 1992. "Bargaining and the Right to Remain Silent," Econometrica, Econometric Society, vol. 60(3), pages 597-625, May. [Downloadable!] (restricted)
  2. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April. [Downloadable!] (restricted)
  3. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-64, November. [Downloadable!] (restricted)
  4. Roth, D., 1993. "Rationalizable Predatory Pricing," Papers 93-12, Michigan - Center for Research on Economic & Social Theory.
  5. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  6. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 54(3), pages 345-64, July. [Downloadable!] (restricted)
  7. Rubinstein, Ariel, 1985. "A Bargaining Model with Incomplete Information about Time Preferences," Econometrica, Econometric Society, vol. 53(5), pages 1151-72, September. [Downloadable!] (restricted)
  8. Cramton, Peter C, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 205-25, January. [Downloadable!] (restricted)
    Other versions:
  9. Ausubel, Lawrence M & Deneckere, Raymond J, 1989. "Reputation in Bargaining and Durable Goods Monopoly," Econometrica, Econometric Society, vol. 57(3), pages 511-31, May. [Downloadable!] (restricted)
  10. Sanford J. Grossman & Motty Perry, 1986. "Sequential Bargaining Under Asymmetric Information," NBER Technical Working Papers 0056, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-28, July. [Downloadable!] (restricted)
  12. Ausubel, Lawrence M & Deneckere, Raymond J, 1993. "Efficient Sequential Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 60(2), pages 435-61, April. [Downloadable!] (restricted)
  13. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-50, July. [Downloadable!] (restricted)
  14. Kennan, John & Wilson, Robert, 1993. "Bargaining with Private Information," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 45-104, March. [Downloadable!] (restricted)
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  15. Borgers, Tilman, 1992. "Iterated Elimination of Dominated Strategies in a Bertrand-Edgeworth Model," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 163-76, January. [Downloadable!] (restricted)
  16. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine. [Downloadable!]
  17. Fudenberg, Drew & Tirole, Jean, 1983. "Sequential Bargaining with Incomplete Information," Review of Economic Studies, Blackwell Publishing, vol. 50(2), pages 221-47, April. [Downloadable!] (restricted)
  18. Watson, Joel, 1993. "A "Reputation" Refinement without Equilibrium," Econometrica, Econometric Society, vol. 61(1), pages 199-205, January. [Downloadable!] (restricted)
  19. Cho, In-Koo, 1994. "Stationarity, Rationalizability and Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 61(2), pages 357-74, April. [Downloadable!] (restricted)
  20. Bikhchandani, Sushil, 1992. "A Bargaining Model with Incomplete Information," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 187-203, January. [Downloadable!] (restricted)
  21. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August. [Downloadable!] (restricted)
  22. Chatterjee, Kalyan & Samuelson, Larry, 1987. "Bargaining with Two-Sided Incomplete Information: An Infinite Horizon Model with Alternating Offers," Review of Economic Studies, Blackwell Publishing, vol. 54(2), pages 175-92, April. [Downloadable!] (restricted)
  23. Cho, In-Koo, 1990. "Uncertainty and Delay in Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 57(4), pages 575-95, October. [Downloadable!] (restricted)
  24. Gul, Faruk & Sonnenschein, Hugo, 1988. "On Delay in Bargaining with One-Sided Uncertainty," Econometrica, Econometric Society, vol. 56(3), pages 601-11, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Paul Schweinzer, 2006. "Sequential bargaining with pure common values," Discussion Papers 137, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  2. Pierpaolo Battigalli, 2004. "Rationalization in Signaling Games: Theory and Applications," Working Papers 275, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  3. Xavier Jarque & Clara Ponsati & Jozsef Sakovics, 2004. "Mediation: Incomplete information bargaining with filtered communication," ESE Discussion Papers 75, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
    Other versions:
  4. Ana MAULEON & Vincent J. VANNETELBOSCH, 2002. "Strategic Union Delegation and Strike Activity," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
    Other versions:
  5. 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). [Downloadable!]
  6. Roberto Serrano, 2007. "Bargaining," Working Papers 2007-06, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales. [Downloadable!]
  7. Ana MAULEON & Vincent J. VANNETELBOSCH, 2001. "Bargaining with Endogenous Deadlines," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
    Other versions:
  8. Vannetelbosch, Vincent J., 1997. "Profit-Sharing: Does It Reduce Bargaining Inefficiencies ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  9. Ana MAULEON & Vincent J. VANNETELBOSCH, 2001. "Product Market Integration, Wage Bargaining and Strike Activity," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  10. MAULEON, Ana & VANNETLEBOSCH, Vincent J., 2001. "Efficiency Wages, Unio-Firm Bargaining, and Strikes," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
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