The Perverse Effects of Outside Options on Strategic Delay in Bargaining
AbstractThis paper shows that giving a player an outside option can worsen his payoff in a bargaining game with strategic delay. If the seller has the option to terminate bargaining and sell the good on the spot market, this can limit the ability of a low-valuation buyer to use delayed responses to signal her type. As a result, high-valuation buyers cannot immediately accept a seller´s offer with probability one, worsening the seller´s payoff.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 165 (2009)
Issue (Month): 2 (June)
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Web page: http://www.mohr.de/jite
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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