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Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations

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  • Thomas H. Noe
  • Jun Wang

Abstract

We analyse a bargaining game in which one party, called the buyer, has the option of choosing the sequence of negotiations with other participants, called sellers. When the sequencing of negotiations is confidential and the sellers' goods are highly complementary, efficient, non-dissipative equilibria exist in which the buyer randomizes over negotiation sequences. In these equilibria, the buyer can obtain higher pay-offs than in pure strategy equilibria or in public negotiations. The degree of sequencing uncertainty that maximizes buyer pay-offs is inversely related to the aggregate bargaining power of the sellers. Copyright 2004, Wiley-Blackwell.

Suggested Citation

  • Thomas H. Noe & Jun Wang, 2004. "Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 855-881.
    • Handle: RePEc:oup:restud:v:71:y:2004:i:3:p:855-881
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2004.00307.x
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    Citations

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    Cited by:

    1. Silvana Krasteva & Huseyin Yildirim, 2011. "Payoff Uncertainty, Bargaining Power, and the Strategic Sequencing of Bilateral Negotiations," Levine's Working Paper Archive 786969000000000208, David K. Levine.
    2. Armstrong, Mark & Zhou, Jidong, 2010. "Exploding offers and buy-now discounts," MPRA Paper 22531, University Library of Munich, Germany.
    3. Xiao, Jun, 2018. "Bargaining orders in a multi-person bargaining game," Games and Economic Behavior, Elsevier, vol. 107(C), pages 364-379.
    4. Johannes Münster & Markus Reisinger, 2021. "Sequencing Bilateral Negotiations with Externalities," ECONtribute Discussion Papers Series 096, University of Bonn and University of Cologne, Germany.
    5. Chen, Ying & Zápal, Jan, 2022. "Sequential vote buying," Journal of Economic Theory, Elsevier, vol. 205(C).
    6. Clark, Derek J. & Pereau, Jean Christophe, 2009. "Fragmented property rights and royalty bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 546-553, October.
    7. Uyanik, Metin & Yengin, Duygu, 2023. "Expropriation power in private dealings: Quota rule in collective sales," Games and Economic Behavior, Elsevier, vol. 141(C), pages 548-580.
    8. Thomas Hellmann, 2007. "Entrepreneurs and the Process of Obtaining Resources," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 81-109, March.
    9. Montez, João, 2014. "One-to-many bargaining when pairwise agreements are non-renegotiable," Journal of Economic Theory, Elsevier, vol. 152(C), pages 249-265.
    10. Göller, Daniel & Hewer, Michael, 2015. "Breakdown in multilateral negotiations," Journal of Economic Theory, Elsevier, vol. 157(C), pages 478-484.
    11. Gao, Hong & Xu, Haibo, 2021. "Multilateral bargaining with an endogenously determined procedure," Economics Letters, Elsevier, vol. 209(C).
    12. Pancs, Romans, 2013. "Sequential negotiations with costly information acquisition," Games and Economic Behavior, Elsevier, vol. 82(C), pages 522-543.
    13. 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.
    14. Krasteva, Silvana & Yildirim, Huseyin, 2012. "On the role of confidentiality and deadlines in bilateral negotiations," Games and Economic Behavior, Elsevier, vol. 75(2), pages 714-730.
    15. Jun Xiao, 2012. "Bargaining Order in a Multi-Person Bargaining Game," Department of Economics - Working Papers Series 1150, The University of Melbourne.
    16. Clark Derek J & Pereau Jean-Christophe, 2008. "Passing the Buck in Sequential Negotiation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-18, December.

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