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Alternating-offer bargaining with the global games information structure

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  • Tsoy, Anton

    (Department of Economics, Einaudi Institute for Economics and Finance)

Abstract

In this study, I examine the alternating-offer bilateral bargaining model with private correlated values. The correlation of values is modeled via the global games information structure. I focus on the double limits of perfect Bayesian equilibria as offers become frequent and the correlation approaches perfect. I characterize the Pareto frontier of the double limits and show that it is efficient, but the surplus split generally differs from the Nash Bargaining split. I then construct a double limit that approximates the Nash Bargaining split in the ex-post surplus, but with a delay. Further, I prove the Folk theorem when the range of the buyer's values coincides with the range of the seller's costs: any feasible and individually rational ex-ante payoff profile can be approximated by a double limit.

Suggested Citation

  • Tsoy, Anton, 2018. "Alternating-offer bargaining with the global games information structure," Theoretical Economics, Econometric Society, vol. 13(2), May.
    • Handle: RePEc:the:publsh:2543
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    References listed on IDEAS

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    More about this item

    Keywords

    Bargaining delay; alternating offers; incomplete information; private correlated values; Coase conjecture; global games;
    All these keywords.

    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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