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Open- versus Closed-Door Negotiations

Author

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  • Motty Perry
  • Larry Samuelson

Abstract

We examine a noncooperative bargaining between two agents, one of whom (agent 1) represents a constituency. Under "closed-door" bargaining, constituents must approve the final bargaining agreement. In the "open-door" case, constituents may also terminate bargaining after intermediate offers have been made and rejected. A "learning effect" and a "termination effect" arise in open-door bargaining. The former increases and the latter decreases the payoff to agent 2 from rejecting offers. The termination effect dominates, making agent 2 less likely to reject offers and hence making agent 1 more aggressive in the open-door case.

Suggested Citation

  • Motty Perry & Larry Samuelson, 1994. "Open- versus Closed-Door Negotiations," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 348-359, Summer.
    • Handle: RePEc:rje:randje:v:25:y:1994:i:summer:p:348-359
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    Cited by:

    1. Otto H. Swank & Bauke Visser, 2007. "Is Transparency to no avail? Committee Decision-making, Pre-meetings, and Credible Deals," Tinbergen Institute Discussion Papers 07-055/1, Tinbergen Institute.
    2. Yeon-Koo Che, 2002. "The Economics of Collective Negotiation in Pretrial Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 549-576, May.
    3. Daniel Cardona & Clara Ponsatí, 2015. "Representing a democratic constituency in negotiations: delegation versus ratification," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 399-414, September.
    4. Segendorff, Bjorn, 1998. "Delegation and Threat in Bargaining," Games and Economic Behavior, Elsevier, vol. 23(2), pages 266-283, May.
    5. Annick Laruelle & Federico Valenciano, 2008. "Bargaining in Committees of Representatives," Journal of Theoretical Politics, , vol. 20(1), pages 93-106, January.
    6. Oliver Kirchkamp & Ulrike Vollstädt, 2012. "Bargaining with Two-Person-Groups - On the Insignificance of the Patient Partner," Jena Economics Research Papers 2012-043, Friedrich-Schiller-University Jena.
    7. Suchan Chae & Paul Heidhues, 2001. "Nash Bargaining Solution with Coalitions and The Joint Bargaining Paradox," CIG Working Papers FS IV 01-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    8. Federico Valenciano & Annick Laruelle, 2005. "Bargaining In Committees Of Representatives: The Optimal Voting Rule," Working Papers. Serie AD 2005-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    9. Cai, Hongbin, 2000. "Bargaining on Behalf of a Constituency," Journal of Economic Theory, Elsevier, vol. 92(2), pages 234-273, June.
    10. Kirchkamp, Oliver & Vollstädt, Ulrike, 2014. "Bilateral bargaining of heterogeneous groups—How significant are patient partners?," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 433-441.

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