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Bargaining Frictions, Bargaining Procedures and Implied Costs in Multiple-Issue Bargaining

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  • Busch, Lutz-Alexander
  • Horstmann, Ignatius J

Abstract

This paper explores how bargaining frictions and bargaining procedures interact to determine players' bargaining costs in multiple-issue bargaining settings. When bargaining frictions take the form of discounting and agreements are implemented as they are reached, issue-by-issue negotiation can generate bargaining costs different from those that occur if all issues are bargained simultaneously. These cost differences result in differences in allocations across bargaining procedures such that players disagree on the desired method of bargaining. Similar results hold for certain fixed-cost bargaining friction specifications. This analysis provides a potential explanation of both agenda bargaining and incomplete contracts. Copyright 1997 by The London School of Economics and Political Science

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  • Busch, Lutz-Alexander & Horstmann, Ignatius J, 1997. "Bargaining Frictions, Bargaining Procedures and Implied Costs in Multiple-Issue Bargaining," Economica, London School of Economics and Political Science, vol. 64(256), pages 669-680, November.
  • Handle: RePEc:bla:econom:v:64:y:1997:i:256:p:669-80
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    Citations

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    Cited by:

    1. Busch, Lutz-Alexander & Horstmann, Ignatius J., 2002. "The game of negotiations: ordering issues and implementing agreements," Games and Economic Behavior, Elsevier, vol. 41(2), pages 169-191, November.
    2. Bossert, Walter & Peters, Hans, 2000. "Multi-attribute decision-making in individual and social choice," Mathematical Social Sciences, Elsevier, vol. 40(3), pages 327-339, November.
    3. Flamini, Francesca, 2007. "First things first? The agenda formation problem for multi-issue committees," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 138-157, May.
    4. Francesca Flamini, "undated". "Strategic Effects and Incentives in Multi-issue Bargaining Games," Working Papers 2005_5, Business School - Economics, University of Glasgow.
    5. repec:spr:grdene:v:18:y:2009:i:2:d:10.1007_s10726-008-9119-9 is not listed on IDEAS
    6. Roberto Serrano, 2007. "Bargaining," Working Papers 2007-06, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    7. Henrik Horn & Petros C. Mavroidis, 2014. "Multilateral environmental agreements in the WTO: Silence speaks volumes," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 147-166, March.
    8. Ignatius J. Horstmann & James R. Markusen & Jack Robles, 2001. "Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain," NBER Working Papers 8347, National Bureau of Economic Research, Inc.
    9. Bloch, Francis & de Clippel, Geoffroy, 2010. "Cores of combined games," Journal of Economic Theory, Elsevier, vol. 145(6), pages 2424-2434, November.
    10. Francesca Flamini, "undated". "A Note on Agenda Restrictions in Multi-Issue Bargaining," Working Papers 2003_15, Business School - Economics, University of Glasgow.
    11. In, Younghwan & Serrano, Roberto, 2004. "Agenda restrictions in multi-issue bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 53(3), pages 385-399, March.
    12. D r. (elect.) Julia Korosteleva, "undated". "Maximising Seigniorage and Inflation Tax: The Case of Belarus," Working Papers 2006_5, Business School - Economics, University of Glasgow.
    13. Aviad Heifetz & Clara Ponsati, 2007. "All in good time," International Journal of Game Theory, Springer;Game Theory Society, vol. 35(4), pages 521-538, April.
    14. Acharya, Avidit & Ortner, Juan, 2013. "Delays and partial agreements in multi-issue bargaining," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2150-2163.

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