The role of strategic delay is analyzed in an infinite-horizon alternating-offer model of bargaining. A buyer and seller are engaged in the trade of a single object. Both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly. An equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer. A bargainer expecting large gains from trade is more impatient than one expecting small gains, and hence makes concessions earlier on. Trade occurs whenever gains from trade exist, but due to the private information, only after costly delay.
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Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number
92res.
Length: 21 pages Date of creation: 1992 Date of revision:
09 Jun 1998 Publication status: Published in Review of Economic Studies, 59:1, January 1992, pages 205-225. Handle: RePEc:pcc:pccumd:92res
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
For technical questions regarding this item, or to correct its listing, contact: (Peter Cramton).
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
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.:
Binmore, K. & Osborne, M.J. & Rubinstein, A., 1989.
"Noncooperative Models Of Bargaining,"
Papers
89-26, Michigan - Center for Research on Economic & Social Theory.
Other versions:
Lawrence M. Ausubel & Peter Cramton & Raymond J. Deneckere, 2002.
"Bargaining with Incomplete Information,"
Papers of Peter Cramton
02barg, University of Maryland, Department of Economics - Peter Cramton, revised 12 Mar 2001.
[Downloadable!]
Other versions:
Lawrence M. Ausubel & Raymond J. Deneckere, 1988.
"Efficient Sequential Bargaining,"
Discussion Papers
804, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
[Downloadable!]
Cited by: (explanations, 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.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.