IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v157y2015icp478-484.html
   My bibliography  Save this article

Breakdown in multilateral negotiations

Author

Listed:
  • Göller, Daniel
  • Hewer, Michael

Abstract

We analyze a complete information multilateral bargaining model in which a buyer is to purchase two complementary goods from two sellers. Binding cash-offer contracts are used to govern transactions. In contrast to preexisting literature, we do not normalize the parties' reservation utilities to zero. We show that this assumption holds critical importance by demonstrating that a complete breakdown of negotiations may occur as the unique equilibrium outcome, even if only two sellers are present.

Suggested Citation

  • Göller, Daniel & Hewer, Michael, 2015. "Breakdown in multilateral negotiations," Journal of Economic Theory, Elsevier, vol. 157(C), pages 478-484.
  • Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:478-484
    DOI: 10.1016/j.jet.2015.01.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S002205311500023X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jet.2015.01.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Van Damme, Eric & Selten, Reinhard & Winter, Eyal, 1990. "Alternating bid bargaining with a smallest money unit," Games and Economic Behavior, Elsevier, vol. 2(2), pages 188-201, June.
    3. Asami, Yasushi, 1985. "A game-theoretic approach to the division of profits from economic land development," Regional Science and Urban Economics, Elsevier, vol. 18(2), pages 233-246, May.
    4. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-497, June.
    5. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    6. Kalyan Chatterjee & Larry Samuelson, 1987. "Bargaining with Two-sided Incomplete Information: An Infinite Horizon Model with Alternating Offers," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 175-192.
    7. Genicot, Garance & Ray, Debraj, 2006. "Contracts and externalities: How things fall apart," Journal of Economic Theory, Elsevier, vol. 131(1), pages 71-100, November.
    8. Rob, Rafael, 1989. "Pollution claim settlements under private information," Journal of Economic Theory, Elsevier, vol. 47(2), pages 307-333, April.
    9. Flavio Menezes & Rohan Pitchford, 2004. "A model of seller holdout," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(2), pages 231-253, August.
    10. Eckart, Wolfgang, 1985. "On the land assembly problem," Journal of Urban Economics, Elsevier, vol. 18(3), pages 364-378, November.
    11. Thomas H. Noe & Jun Wang, 2004. "Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations," Review of Economic Studies, Oxford University Press, vol. 71(3), pages 855-881.
    12. Roy Chowdhury, Prabal & Sengupta, Kunal, 2012. "Transparency, complementarity and holdout," Games and Economic Behavior, Elsevier, vol. 75(2), pages 598-612.
    13. George J. Mailath & Andrew Postlewaite, 1990. "Asymmetric Information Bargaining Problems with Many Agents," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 351-367.
    14. Cai, Hongbin, 2000. "Delay in Multilateral Bargaining under Complete Information," Journal of Economic Theory, Elsevier, vol. 93(2), pages 260-276, August.
    15. Busch, Lutz-Alexander & Wen, Quan, 1995. "Perfect Equilibria in Negotiation Model," Econometrica, Econometric Society, vol. 63(3), pages 545-565, May.
    16. Sang-Chul Suh & Quan Wen, 2009. "A multi-agent bilateral bargaining model with endogenous protocol," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 203-226, August.
    17. Thomas J. Miceli & Kathleen Segerson, 2012. "Land Assembly and the Holdout Problem Under Sequential Bargaining," American Law and Economics Review, Oxford University Press, vol. 14(2), pages 372-390.
    18. Oliver Hart, 1989. "Bargaining and Strikes," The Quarterly Journal of Economics, Oxford University Press, vol. 104(1), pages 25-43.
    19. Thomas J. Miceli & Kathleen Segerson, 2011. "Sequential Bargaining, Land Assembly, and the Holdout Problem," Working papers 2011-13, University of Connecticut, Department of Economics, revised Jan 2012.
    20. Drew Fudenberg & Jean Tirole, 1983. "Sequential Bargaining with Incomplete Information," Review of Economic Studies, Oxford University Press, vol. 50(2), pages 221-247.
    21. Byoung Heon Jun, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Oxford University Press, vol. 56(1), pages 59-76.
    22. Lars A. Stole & Jeffrey Zwiebel, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 375-410.
    23. Hongbin Cai, 2003. "Inefficient Markov perfect equilibria in multilateral bargaining," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(3), pages 583-606, October.
    24. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October.
    25. 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


    Cited by:

    1. Sarkar, Soumendu, 2018. "Convergence of VCG mechanism to ex-post budget balance in a model of land acquisition," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 37-46.
    2. Ying Chen & Jan Zapal, 2021. "Sequential Vote Buying," CERGE-EI Working Papers wp692, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xiao, Jun, 2018. "Bargaining orders in a multi-person bargaining game," Games and Economic Behavior, Elsevier, vol. 107(C), pages 364-379.
    2. Cai, Hongbin, 2000. "Delay in Multilateral Bargaining under Complete Information," Journal of Economic Theory, Elsevier, vol. 93(2), pages 260-276, August.
    3. Cai, Hongbin, 2000. "Bargaining on Behalf of a Constituency," Journal of Economic Theory, Elsevier, vol. 92(2), pages 234-273, June.
    4. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225, Elsevier.
    5. Chiu Yu Ko & Duozhe Li, 2020. "Decentralized One‐To‐Many Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(3), pages 1139-1172, August.
    6. Montez, João, 2014. "One-to-many bargaining when pairwise agreements are non-renegotiable," Journal of Economic Theory, Elsevier, vol. 152(C), pages 249-265.
    7. 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.
    8. Roy Chowdhury, Prabal & Sengupta, Kunal, 2012. "Transparency, complementarity and holdout," Games and Economic Behavior, Elsevier, vol. 75(2), pages 598-612.
    9. Prabal Roy Chowdhury & Kunal Sengupta, 2008. "Multi-person bargaining with complementarity: Is there holdout?," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-10, Indian Statistical Institute, New Delhi, India.
    10. Sarkar, Shubhro, 2016. "Bargaining order and delays in multilateral bargaining with heterogeneous sellers," Mathematical Social Sciences, Elsevier, vol. 80(C), pages 1-20.
    11. Dilip Abreu & David G. Pearce, 2006. "Reputational Wars of Attrition with Complex Bargaining Postures," Levine's Working Paper Archive 122247000000001218, David K. Levine.
    12. Ayşe Mumcu, 2010. "Strategic Withholding Of Firm‐Specific Skills In Wage Bargaining," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 187-211, May.
    13. Sebastian Schweighofer-Kodritsch, 2015. "Time Preferences and Bargaining," STICERD - Theoretical Economics Paper Series /2015/568, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    14. Weinberger, Catherine J., 2000. "Selective Acceptance and Inefficiency in a Two-Issue Complete Information Bargaining Game," Games and Economic Behavior, Elsevier, vol. 31(2), pages 262-293, May.
    15. Mumcu, Ayşe, 1999. "Firm-Specific Skills, Wage Bargaining, and Efficiency," MPRA Paper 1913, University Library of Munich, Germany.
    16. Ying Chen & Jan Zapal, 2021. "Sequential Vote Buying," CERGE-EI Working Papers wp692, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    17. Maurya, Amit Kumar, 2015. "Multilateral Bargaining with Discrete Surplus," MPRA Paper 67558, University Library of Munich, Germany.
    18. Sarkar, Soumendu, 2018. "Convergence of VCG mechanism to ex-post budget balance in a model of land acquisition," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 37-46.
    19. Luca Anderlini & Leonardo Felli, 1998. "Costly Bargaining and Renegotiation - (Now published in Econometrica, 69(4) (March 2001), pp. 377-411.)," STICERD - Theoretical Economics Paper Series 361, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    20. Dilip Abreu & David G. Pearce, 2006. "Bargaining, Reputation and Equilibrium Selection in Repeated Games with Contracts," Levine's Bibliography 321307000000000640, UCLA Department of Economics.

    More about this item

    Keywords

    Multilateral bargaining; Complete information; Breakdown; Coase theorem;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:478-484. 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: . General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.