IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2024_515.html
   My bibliography  Save this paper

Bargaining with Binary Private Information

Author

Listed:
  • Francesc Dilmé

Abstract

This paper studies bargaining between a seller and a buyer with binary private valuation. Because the setting is more tractable than the case of general valuation distributions (studied in Gul et al., 1986), we are able to explicitly construct the full set of equilibria via induction. This lets us provide a simple proof of the Coase conjecture and obtain new results: The seller extracts all surplus as she becomes more patient, and the equilibrium outcome converges to the perfect-information outcome as private information vanishes. We also fully characterize the case where there is a deadline: We establish that if the probability that the buyer’s valuation is high is large enough, then the seller charges a high price at all times, there are trade bursts at the outset and the deadline, and trade occurs at a constant rate in between.

Suggested Citation

  • Francesc Dilmé, 2024. "Bargaining with Binary Private Information," CRC TR 224 Discussion Paper Series crctr224_2024_515, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2024_515
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp515
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francesc Dilmé & Fei Li, 2019. "Revenue Management without Commitment: Dynamic Pricing and Periodic Flash Sales," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(5), pages 1999-2034.
    2. Michael Landsberger & Isaac Meilijson, 1985. "Intertemporal Price Discrimination and Sales Strategy under Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 424-430, Autumn.
    Full references (including those not matched with items on IDEAS)

    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. Francesc Dilmé, 2023. "The Role of Discounting in Bargaining with Private Information," ECONtribute Discussion Papers Series 267, University of Bonn and University of Cologne, Germany.
    2. Ahmadi, Iman & Skiera, Bernd & Lambrecht, Anja & Heubrandner, Florian, 2017. "Time preferences and the pricing of complementary durables and consumables," International Journal of Research in Marketing, Elsevier, vol. 34(4), pages 813-828.
    3. Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 333-349, June.
    4. Correia-da-Silva, João, 2021. "Optimal priority pricing by a durable goods monopolist," Games and Economic Behavior, Elsevier, vol. 129(C), pages 310-328.
    5. Aniko Ory, 2016. "Consumers on a Leash: Advertised Sales and Intertemporal Price Discrimination," Cowles Foundation Discussion Papers 2047, Cowles Foundation for Research in Economics, Yale University.
    6. Hikmet Gunay, 2014. "Waiting for Signaling Quality," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 364-386, October.
    7. Li Li & Li Jiang, 2022. "How should firms adapt pricing strategies when consumers are time‐inconsistent?," Production and Operations Management, Production and Operations Management Society, vol. 31(9), pages 3457-3473, September.
    8. Zhang, Hanzhe, 2021. "The optimal sequence of prices and auctions," European Economic Review, Elsevier, vol. 133(C).
    9. Epstein, G. S., 1998. "Retail pricing and clearance sales: the multiple product case," Journal of Economics and Business, Elsevier, vol. 50(6), pages 551-563, November.
    10. Chae, Suchan, 2003. "Can time preference be an instrument for price discrimination?," Economics Letters, Elsevier, vol. 81(2), pages 173-177, November.
    11. Wilner, Lionel, 2014. "Intertemporal price discrimination in infinite horizon," Economics Letters, Elsevier, vol. 122(2), pages 358-361.
    12. Gaurab Aryal & Charles Murry & Jonathan W. Williams, 2018. "Price Discrimination in International Airline Markets," Boston College Working Papers in Economics 968, Boston College Department of Economics.
    13. C K Anderson & J G Wilson, 2003. "Wait or buy? The strategic consumer: Pricing and profit implications," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(3), pages 299-306, March.
    14. Ortner, Juan, 2023. "Bargaining with evolving private information," Theoretical Economics, Econometric Society, vol. 18(3), July.
    15. Schur, Rouven & Gönsch, Jochen & Hassler, Michael, 2019. "Time-consistent, risk-averse dynamic pricing," European Journal of Operational Research, Elsevier, vol. 277(2), pages 587-603.
    16. Aniko …ry & Ali Horta su & Kevin Williams, 2022. "Dynamic Price Competition: Theory and Evidence from Airline Markets," Cowles Foundation Discussion Papers 2341R1, Cowles Foundation for Research in Economics, Yale University, revised Apr 2023.
    17. Arian Aflaki & Pnina Feldman & Robert Swinney, 2019. "Becoming Strategic: Endogenous Consumer Time Preferences and Multiperiod Pricing," Operations Research, INFORMS, vol. 68(4), pages 1116-1131, July.
    18. Yossi Aviv & Mike Mingcheng Wei & Fuqiang Zhang, 2019. "Responsive Pricing of Fashion Products: The Effects of Demand Learning and Strategic Consumer Behavior," Management Science, INFORMS, vol. 65(7), pages 2982-3000, July.
    19. Daniel F. Garrett, 2016. "Intertemporal Price Discrimination: Dynamic Arrivals and Changing Values," American Economic Review, American Economic Association, vol. 106(11), pages 3275-3299, November.
    20. Nishihara, Michi, 2023. "Target-initiated takeover with search frictions," European Journal of Operational Research, Elsevier, vol. 305(3), pages 1480-1497.

    More about this item

    Keywords

    Bargaining; private information; one-sided offers.;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:bon:boncrc:crctr224_2024_515. See general information about how to correct material in RePEc.

    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: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.