Advanced Search
MyIDEAS: Login to save this paper or follow this series

Bargaining with Incomplete Information: An Infinite-Horizon Model with Two-Sided Uncertainty

Contents:

Author Info

Abstract

The resolution of any bargaining conflict depends crucially on the relative urgency of the agents to reach agreement and the information each agent has about the others' preferences. This paper explores, within the context of an infinite-horizon bargaining model with two-sided uncertainty, how timing and information affect the rational behaviour of agents when commitment is not possible. Since the bargainers are uncertain about whether trade is desirable, they must communicate some of their private information before an agreement can be reached. This need for learning, due to incomplete information about preferences, results in bargaining inefficiencies: trade often occurs after costly delay. Thus, the model provides an explanation for the inefficient bargaining behaviour that appears to occur often in practice.

Download Info

If 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.
File URL: http://www.cramton.umd.edu/papers1984-1989/84res-bargaining-with-incomplete-information.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 84res.

as in new window
Length: 15 pages
Date of creation: 1984
Date of revision: 09 Jun 1998
Publication status: Published in Review of Economic Studies, 51:4, October 1984, pages 579-593.
Handle: RePEc:pcc:pccumd:84res

Contact details of provider:
Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu

Related research

Keywords: Bargaining; Delay; Incomplete Information;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Lawrence M. Ausubel & Peter Cramton & Raymond J. Deneckere, 2002. "Bargaining with Incomplete Information," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 02barg, University of Maryland, Department of Economics - Peter Cramton, revised 12 Mar 2001.
  2. David M Kreps & Robert Wilson, 2003. "Sequential Equilibria," Levine's Working Paper Archive 618897000000000813, David K. Levine.
  3. Peter Cramton, 1985. "Sequential Bargaining Mechanisms," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 85roth, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  4. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 97-109, January.
  6. Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, Econometric Society, vol. 51(6), pages 1799-819, November.
  7. Fudenberg, Drew & Tirole, Jean, 1983. "Sequential Bargaining with Incomplete Information," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(2), pages 221-47, April.
  8. Drew Fudenberg & David Levine, 1982. "Sequential Equilibria of Finite and Infinite Horizon Games," UCLA Economics Working Papers, UCLA Department of Economics 242, UCLA Department of Economics.
  9. Sobel, Joel & Takahashi, Ichiro, 1983. "A Multistage Model of Bargaining," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(3), pages 411-26, July.
  10. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. William Fuchs & Andrzej Skrzypacz, 2010. "Bargaining with Arrival of New Traders," American Economic Review, American Economic Association, American Economic Association, vol. 100(3), pages 802-36, June.
  2. Menezes, Flavio M., 1996. "Multiple-unit English auctions," European Journal of Political Economy, Elsevier, Elsevier, vol. 12(4), pages 671-684, December.
  3. Kaya, Ayça & Liu, Qingmin, 0. "Transparency and price formation," Theoretical Economics, Econometric Society, Econometric Society.
  4. Xavier Jarque & Clara Ponsat?Author-Name: Jozsef Sakovics, 2001. "Mediation: Incomplete information bargaining with," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 502.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  5. Xavier Jarque & Clara Ponsati & Jozsef Sakovics, 2004. "Mediation: Incomplete information bargaining with filtered communication," ESE Discussion Papers, Edinburgh School of Economics, University of Edinburgh 75, Edinburgh School of Economics, University of Edinburgh.
  6. Teng, Jimmy, 2012. "Solving Two Sided Incomplete Information Games with Bayesian Iterative Conjectures Approach," MPRA Paper 40061, University Library of Munich, Germany, revised 12 Jul 2012.
  7. Attila Ambrus & Ben Greiner & Parag A. Pathak, 2014. "How Individual Preferences are Aggregated in Groups: An Experimental Study," Discussion Papers, School of Economics, The University of New South Wales 2014-30, School of Economics, The University of New South Wales.
  8. Mark A. Satterthwaite & Steven R. Williams, 1988. "The Rate of Convergence to Efficiency In The Buyer's BidDouble Auction As The Market Becomes Large," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 741, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Moon, Yongma & Yao, Tao & Park, Sungsoon, 2011. "Price negotiation under uncertainty," International Journal of Production Economics, Elsevier, Elsevier, vol. 134(2), pages 413-423, December.
  10. Wang, Ruqu, 2001. "Optimal pricing strategy for durable-goods monopoly," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 25(5), pages 789-804, May.
  11. Abreu, Dilip & Pearce, David G. & Stacchetti, Ennio, 0. "One-sided uncertainty and delay in reputational bargaining," Theoretical Economics, Econometric Society, Econometric Society.
  12. Schweinzer, Paul, 2010. "Sequential bargaining with common values," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 109-121, January.
  13. Kamdem, Cyrille Bergaly & Galtier, Franck & Gockowski, James & Helene, David-Benz & Egg, Johny & Dia, Bernadette Kamgnia, 2010. "What determines the price received by cocoa farmers in Cameroon? An empirical analysis based on bargaining theory," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, African Association of Agricultural Economists, vol. 5(2), December.
  14. Antonio Merlo & François Ortalo-Magné, 2002. "Bargaining over Residential Real Estate: Evidence from England (Third Version)," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 04-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2002.
  15. Lemke, Robert J., 2004. "Dynamic bargaining with action-dependent valuations," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(9), pages 1847-1875, July.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pcc:pccumd:84res. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Cramton).

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.