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Over-confidence may reduce negotiation delay

  • Galasso, Alberto
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    Abstract When a seller negotiates with multiple buyers, how does over-confidence affect the timing of trade? In this paper we distinguish between over-confidence about trade opportunities and over-confidence about the terms of trade. In bargaining environments without externalities both types of over-confidence can cause delays in agreement. If externalities are present the two forms of subjective bias have very different impacts on delay. In particular, over-confidence about trade opportunities may reduce bargaining delay.

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    File URL: http://www.sciencedirect.com/science/article/B6V8F-5120JYD-3/2/4467a871eb5158552b1b3180a077f984
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    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 76 (2010)
    Issue (Month): 3 (December)
    Pages: 716-733

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    Handle: RePEc:eee:jeborg:v:76:y:2010:i:3:p:716-733
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