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Uncertainty and Delay in Bargaining

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  • In-Koo Cho

Abstract

This paper investigates the relationship between uncertainty and delay of agreement in the one-sided offer bargaining model with two-sided uncertainty where the seller makes offers. We construct a weak stationary equilibrium in which different types of the seller charge different prices in every period. We completely characterize the separating equilibrium by three regularity conditions, and show that the time interval between offers converges to zero, the seller's initial price offer in a separating equilibrium converges with probability 1 to the lowest valuation of the buyer if and only if the gain from trading is common knowledge.

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  • In-Koo Cho, 1990. "Uncertainty and Delay in Bargaining," Review of Economic Studies, Oxford University Press, vol. 57(4), pages 575-595.
    • Handle: RePEc:oup:restud:v:57:y:1990:i:4:p:575-595.
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    Cited by:

    1. Ilwoo Hwang, 2013. "A Theory of Bargaining Deadlock," PIER Working Paper Archive 13-050, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    2. Sambuddha Ghosh & Gabriele Gratton & Caixia Shen, 2019. "Intimidation: Linking Negotiation And Conflict," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(4), pages 1589-1618, November.
    3. D. Abreu & D. Pearce, 1999. "A Behavioral Model of Bargaining with Endogenous Types," Princeton Economic Theory Papers 00s15, Economics Department, Princeton University.
    4. Thành Nguyen & Vijay Subramanian & Randall Berry, 2016. "Delay in Trade Networks," Operations Research, INFORMS, vol. 64(3), pages 646-661, June.
    5. Merlo, Antonio & Ortalo-Magne, Francois, 2004. "Bargaining over residential real estate: evidence from England," Journal of Urban Economics, Elsevier, vol. 56(2), pages 192-216, September.
    6. Dimitri Vayanos, 1999. "Strategic Trading and Welfare in a Dynamic Market," Review of Economic Studies, Oxford University Press, vol. 66(2), pages 219-254.
    7. Kyung nok Chun & Zachary Schaller & Stergios Skaperdas, 2020. "Why Are There Strikes?," CESifo Working Paper Series 8620, CESifo.
    8. Kaya, Ayça, 2009. "Repeated signaling games," Games and Economic Behavior, Elsevier, vol. 66(2), pages 841-854, July.
    9. Flavio Toxvaerd, 2017. "Dynamic limit pricing," RAND Journal of Economics, RAND Corporation, vol. 48(1), pages 281-306, March.
    10. Hsieh, Chang-Tai, 2000. "Bargaining over reform," European Economic Review, Elsevier, vol. 44(9), pages 1659-1676, October.
    11. Tsoy, Anton, 2018. "Alternating-offer bargaining with the global games information structure," Theoretical Economics, Econometric Society, vol. 13(2), May.
    12. Lopomo, Giuseppe & Ok, Efe A, 2001. "Bargaining, Interdependence, and the Rationality of Fair Division," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 263-283, Summer.
    13. Xavier Jarque & Clara Ponsat?Author-Name: Jozsef Sakovics, 2001. "Mediation: Incomplete information bargaining with," UFAE and IAE Working Papers 502.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    14. Peter C. Cramton, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 205-225.
    15. Dang, Tri Vi, 2008. "Bargaining with endogenous information," Journal of Economic Theory, Elsevier, vol. 140(1), pages 339-354, May.
    16. Dilip Abreu & David Pearce, 2003. "A Behavioral Model of Bargaining with Endogenous Types," Cowles Foundation Discussion Papers 1446, Cowles Foundation for Research in Economics, Yale University.
    17. Jean-Pierre P. Langlois & Catherine C. Langlois, 2004. "Holding Out for Concession: The Quest for Gain in the Negotiation of International Agreements," International Interactions, Taylor & Francis Journals, vol. 32(3), pages 261-293, April.
    18. Karagözoğlu, Emin & Keskin, Kerim, 2018. "Time-varying fairness concerns, delay, and disagreement in bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 115-128.
    19. Giuseppe Lopomo & Efe A Ok, 2004. "Bargaining, Interdependence and the Rationality of Fair Division," Levine's Bibliography 122247000000000395, UCLA Department of Economics.
    20. Hwang, Ilwoo, 2018. "A theory of bargaining deadlock," Games and Economic Behavior, Elsevier, vol. 109(C), pages 501-522.
    21. William Fuchs & Andrzej Skrzypacz, 2010. "Bargaining with Arrival of New Traders," American Economic Review, American Economic Association, vol. 100(3), pages 802-836, June.
    22. Feinberg, Yossi & Skyzypacz, Andrzej, 2002. "Uncertainty about Uncertainty and Delay in Bargaining," Research Papers 1765, Stanford University, Graduate School of Business.
    23. Jarque, Xavier & Ponsati, Clara & Sakovics, Jozsef, 2003. "Mediation: incomplete information bargaining with filtered communication," Journal of Mathematical Economics, Elsevier, vol. 39(7), pages 803-830, September.
    24. Abreu, Dilip & Pearce, David G. & Stacchetti, Ennio, 2015. "One-sided uncertainty and delay in reputational bargaining," Theoretical Economics, Econometric Society, vol. 10(3), September.

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