Disagreement and Authority
Can two negotiators fail to agree when both the size of the surplus and the rationality of the negotiators are common knowledge? We show that the answer is affrmative. When the negotiators can make irrevocable commitments at a low but positive cost, the unique symmetric equilibrium entails disagreement with high probability. In the unique pair of pure strategy equilibria, one party gets all the surplus. Even though we impose no constraints on side-payments, effcient compromises are unattainable. A strongly asymmetric authority relationship is thus the only viable alternative to costly conï¬‚ict.
|Date of creation:||18 Jul 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +049 3641/ 9 43000
Fax: +049 3641/ 9 43000
Web page: http://www.jenecon.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-23, May.
- Kambe, Shinsuke, 1999. "Bargaining with Imperfect Commitment," Games and Economic Behavior, Elsevier, vol. 28(2), pages 217-237, August.
- Olivier Compte & Philippe Jehiel, 2004.
"Gradualism in Bargaining and Contribution Games,"
Review of Economic Studies,
Oxford University Press, vol. 71(4), pages 975-1000.
- Ching-to Albert Ma & Michael Manove, 1991.
"Bargaining with Deadlines and Imperfect Player Control,"
0007, Boston University - Industry Studies Programme.
- Ma, Ching-To Albert & Manove, Michael, 1993. "Bargaining with Deadlines and Imperfect Player Control," Econometrica, Econometric Society, vol. 61(6), pages 1313-39, November.
- Abhinay Muthoo, .
"A Bargaining Model Based on the Commitment Tactic,"
Economics Discussion Papers
420, University of Essex, Department of Economics.
- Ellingsen, Tore, 1995.
"The Evolution of Bargaining Behavior,"
SSE/EFI Working Paper Series in Economics and Finance
61, Stockholm School of Economics.
- Güth, W. & Ritzberger, K. & van Damme, E.E.C., 2002.
"On the Nash Bargaining Solution with Noise,"
2002-79, Tilburg University, Center for Economic Research.
- Fershtman Chaim & Seidmann Daniel J., 1993. "Deadline Effects and Inefficient Delay in Bargaining with Endogenous Commitment," Journal of Economic Theory, Elsevier, vol. 60(2), pages 306-321, August.
- D. Abreu & F. Gul, 1998.
"Bargaining and Reputation,"
Princeton Economic Theory Papers
00s9, Economics Department, Princeton University.
- Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
- Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
- Olivier Compte & Philippe Jehiel, 2002. "On the Role of Outside Options in Bargaining with Obstinate Parties," Econometrica, Econometric Society, vol. 70(4), pages 1477-1517, July.
- Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2007-037. 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: (Markus Pasche)
If references are entirely missing, you can add them using this form.