Incomplete Information Bargaining with Outside Opportunities
AbstractWe consider two kinds of Ã¢â¬Ëoutside opportunityÃ¢â¬â¢ that a seller of an indivisible good might have: selling to a different buyer and consuming the good herself. In both models the seller is uncertain about the buyer's valuation, and becomes more pessimistic over time. When the seller becomes sufficiently pessimistic, she prefers the outside opportunity, so she will not bargain indefinitely with the current buyer. Despite the resulting finite-horizon nature of negotiations, the link between the buyer's willingness to accept an offer and the seller's eagerness to go "outside" generates multiple equilibria.
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Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 102 (1987)
Issue (Month): 1 (February)
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Web page: http://mitpress.mit.edu/journals/
Other versions of this item:
- Drew Fudenberg & David K. Levine & Jean Tirole, 1987. "Incomplete Information Bargaining with Outside Opportunities," Levine's Working Paper Archive 229, David K. Levine.
- Tirole, Jean & Levine, David & Fudenberg, Drew, 1987. "Incomplete Information Bargaining with Outside Opportunities," Scholarly Articles 3196301, Harvard University Department of Economics.
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