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Career Concerns of Bargainers

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  • John Fingleton

Abstract

This article studies strategic bargaining in which a seller and a buyer are each represented by an agent. Potential agents differ in their ability to obtain information about the other party's reservation price; neither principal knows the other's reservation price or her agent's type. Agents are motivated by career concerns; they want to be perceived as skilled bargainers by their principals. In equilibrium, skilled agents use their private information optimally, while unskilled agents randomize between aggressive and soft price bids, attempting to imitate skilled types. We compare "open-door" bargaining, in which principals can observe the entire bargaining game as well as its outcome, with "closed-door" bargaining, in which they observe only the outcome. We show that agents unambiguously bargain more aggressively with open doors than behind closed doors, which leads to a less efficient bargaining outcome. Their principals may therefore prefer to let their agents bargain behind closed doors. Copyright 2005, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal The Journal of Law, Economics, and Organization.

Volume (Year): 21 (2005)
Issue (Month): 1 (April)
Pages: 179-204

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Handle: RePEc:oup:jleorg:v:21:y:2005:i:1:p:179-204

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Cited by:
  1. Hans Gersbach & Volker Hahn, 2012. "Information acquisition and transparency in committees," International Journal of Game Theory, Springer, vol. 41(2), pages 427-453, May.
  2. Prat, Andrea, 2003. "The Wrong Kind of Transparency," CEPR Discussion Papers 3859, C.E.P.R. Discussion Papers.
  3. Heski Bar-Isaac & Joyee Deb, 2012. "Reputation for a Servant of Two Masters," Working Papers 12-08, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Hahn, Volker, 2008. "Committees, sequential voting and transparency," Mathematical Social Sciences, Elsevier, vol. 56(3), pages 366-385, November.
  5. Gürtler, Oliver, 2006. "Implicit Contracts: Two Different Approaches," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 110, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  6. Koch, Alexander K. & Peyrache, Eloic, 2004. "Mixed Up? That's Good for Motivation," IZA Discussion Papers 1331, Institute for the Study of Labor (IZA).
  7. Otto H. Swank & Bauke Visser, 2007. "Is Transparency to no avail? Committee Decision-making, Pre-meetings, and Credible Deals," Tinbergen Institute Discussion Papers 07-055/1, Tinbergen Institute.
  8. Clare Leaver, 2007. "Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies," Economics Series Working Papers 344, University of Oxford, Department of Economics.
  9. Gilat Levy, 2005. "Decision making in committees: transparency, reputation and voting rules," LSE Research Online Documents on Economics 543, London School of Economics and Political Science, LSE Library.
  10. Gilat Levy, 2007. "Decision making in committees: transparency, reputation, and voting rules," LSE Research Online Documents on Economics 3697, London School of Economics and Political Science, LSE Library.
  11. Oliver Gürtler, 2012. "A Strategic Rationale for the Use of Sell–On Fees in European Sports," Journal of Sports Economics, , vol. 13(1), pages 76-84, February.
  12. Gilat Levy, 2007. "Decision Making in Committees: Transparency, Reputation, and Voting Rules," American Economic Review, American Economic Association, vol. 97(1), pages 150-168, March.
  13. Otto H. Swank & Bauke Visser, 2007. "Is Transparency to no avail? Committee Decision-making, Pre-meetings, and Credible Deals," Tinbergen Institute Discussion Papers 07-055/1, Tinbergen Institute.

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