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Cyclical Delay in Bargaining with Externalities

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  • Philippe Jehiel
  • Benny Moldovanu

Abstract

Externalities between buyers are shown to induce delays in negotiations between a seller and several buyers. Delays arise in a perfect and complete information setting with random matching even when there is no deadline. While with a deadline we identify delays both for positive and negative externalities, without a deadline we find that (1) when externalities are positive, there exists no SPNE in pure strategies with bounded recall that exhibits delay; (2) when externalities are negative, it may happen that all SPNE with bounded recall have the property that long periods of waiting alternate with short periods of activity: This is the cyclical delay phenomenon.

Suggested Citation

  • Philippe Jehiel & Benny Moldovanu, 1995. "Cyclical Delay in Bargaining with Externalities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(4), pages 619-637.
  • Handle: RePEc:oup:restud:v:62:y:1995:i:4:p:619-637.
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    File URL: http://hdl.handle.net/10.2307/2298080
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