Delegated Bargaining And Renegotiation
AbstractWe examine the commitment effect of delegated bargaining when the delegation contract is renegotiable. We consider a seller who can either bargain face-to-face with a prospective buyer or delegate bargaining to an intermediary. The intermediary is able to interrupt negotiating with the buyer to renegotiate the delegation contract. We show that the time cost of renegotiation prevents a full elination of the commitment effect of delegation. Indeed, there are always gains from delegation when the players are sufficiently patient. An extension to search market environment shows that the gains from delegation are negatively related to the efficiency of search.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 440.99.
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Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-07-03 (All new papers)
- NEP-GTH-2000-07-03 (Game Theory)
- NEP-IND-2000-07-03 (Industrial Organization)
- NEP-REG-2000-07-03 (Regulation)
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