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Dynamic Bilateral Bargaining under Private Information with a Sequence of Potential Buyers

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  • Roman Inderst

    (University of Frankfurt)

Abstract

A seller owning a single, indivisible asset faces the random arrival of privately informed buyers, with whom he can bargain sequentially. Our key result is that despite the arrival of alternative buyers the Coase conjecture continues to hold under stationary strategies if the distribution of buyer valuations has convex support: Negotiations end almost immediately and the asset is sold almost at the minimum of the seller's own reservation value and the lowest possible valuation of a buyer. We also show existence of multiple stationary equilibria, though, in the special case where the support of buyers' valuations exhibits a sufficiently large "interior gap". Taken together, our findings thus also point to a potential pitfall when analyzing only two-type distributions in more applied work. (Copyright: Elsevier)

Suggested Citation

  • Roman Inderst, 2008. "Dynamic Bilateral Bargaining under Private Information with a Sequence of Potential Buyers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 220-236, January.
    • Handle: RePEc:red:issued:06-104
    DOI: 10.1016/j.red.2007.04.002
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    References listed on IDEAS

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    Cited by:

    1. Chong Huang & Fei Li, 2011. "Bargaining While Learning About New Arrivals, Second Version," PIER Working Paper Archive 13-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 21 May 2013.
    2. Hwang, Ilwoo & Li, Fei, 2017. "Transparency of outside options in bargaining," Journal of Economic Theory, Elsevier, vol. 167(C), pages 116-147.
    3. William Fuchs & Andrzej Skrzypacz, 2010. "Bargaining with Arrival of New Traders," American Economic Review, American Economic Association, vol. 100(3), pages 802-836, June.
    4. Said, Maher, 2011. "Sequential auctions with randomly arriving buyers," Games and Economic Behavior, Elsevier, vol. 73(1), pages 236-243, September.
    5. Said, Maher, 2008. "Information Revelation and Random Entry in Sequential Ascending Auctions," MPRA Paper 7160, University Library of Munich, Germany.

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    More about this item

    Keywords

    Coase conjecture; Bargaining;

    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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