Disagreement and Authority
AbstractCan two negotiators fail to agree when both the size of the surplus and the rationality of the negotiators are common knowledge? We show that the answer is affrmative. When the negotiators can make irrevocable commitments at a low but positive cost, the unique symmetric equilibrium entails disagreement with high probability. In the unique pair of pure strategy equilibria, one party gets all the surplus. Even though we impose no constraints on side-payments, effcient compromises are unattainable. A strongly asymmetric authority relationship is thus the only viable alternative to costly conï¬‚ict.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-037.
Date of creation: 18 Jul 2007
Date of revision:
Authority; Bargaining; Commitment; Disagreement; Transaction Costs;
Find related papers by JEL classification:
- 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:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Muthoo, Abhinay, 1996.
"A Bargaining Model Based on the Commitment Tactic,"
Journal of Economic Theory,
Elsevier, vol. 69(1), pages 134-152, April.
- Olivier Compte & Philippe Jehiel, 2002. "On the Role of Outside Options in Bargaining with Obstinate Parties," Econometrica, Econometric Society, vol. 70(4), pages 1477-1517, July.
- Ching-to Albert Ma & Michael Manove, 1991.
"Bargaining with Deadlines and Imperfect Player Control,"
0007, Boston University - Industry Studies Programme.
- Ma, Ching-To Albert & Manove, Michael, 1993. "Bargaining with Deadlines and Imperfect Player Control," Econometrica, Econometric Society, vol. 61(6), pages 1313-39, November.
- Ellingsen, Tore, 1995.
"The Evolution of Bargaining Behavior,"
Working Paper Series in Economics and Finance
61, Stockholm School of Economics.
- Olivier Compte & Philippe Jehiel, 2004.
"Gradualism in Bargaining and Contribution Games,"
Review of Economic Studies,
Wiley Blackwell, vol. 71(4), pages 975-1000, October.
- D. Abreu & F. Gul, 1998.
"Bargaining and Reputation,"
Princeton Economic Theory Papers
00s9, Economics Department, Princeton University.
- Fershtman Chaim & Seidmann Daniel J., 1993. "Deadline Effects and Inefficient Delay in Bargaining with Endogenous Commitment," Journal of Economic Theory, Elsevier, vol. 60(2), pages 306-321, August.
- Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
- Guth, Werner & Ritzberger, Klaus & van Damme, Eric, 2004.
"On the Nash bargaining solution with noise,"
European Economic Review,
Elsevier, vol. 48(3), pages 697-713, June.
- Güth, W. & Ritzberger, K. & Damme, E.E.C. van, 2004. "On the Nash Bargaining Solution with noise," Open Access publications from Tilburg University urn:nbn:nl:ui:12-129218, Tilburg University.
- Güth, W. & Ritzberger, K. & Damme, E.E.C. van, 2002. "On the Nash Bargaining Solution with Noise," Discussion Paper 2002-79, Tilburg University, Center for Economic Research.
- Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-23, May.
- Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
- Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
- Kambe, Shinsuke, 1999. "Bargaining with Imperfect Commitment," Games and Economic Behavior, Elsevier, vol. 28(2), pages 217-237, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Markus Pasche).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.