Identification of Stochastic Sequential Bargaining Models
Stochastic sequential bargaining games (Merlo and Wilson (1995, 1998)) have found wide applications in various fields including political economy and macroeconomics due to their flexibility in explaining delays in reaching agreement. In this paper, we present new results in nonparametric identification of such models under different scenarios of data availability. First, with complete data on players’ decisions, the sizes of the surplus to be shared (cakes) and the agreed allocations, both the mapping from states to the total surplus (i.e. the "cake function") and the players’ common discount rate are identified, if the unobservable state variable (USV) is independent of observable ones (OSV), and the total surplus is strictly increasing in the USV conditional on the OSV. Second, when the cake size is only observed under agreements and is additively separable in OSV and USV, the contribution by OSV is identified provided the USV distribution satisfies some distributional exclusion restrictions. Third, if data only report when an agreement is reached but never report the cake sizes, we propose a simple algorithm that exploits exogenously given shape restrictions on the cake function and the independence of USV from OSV to recover all rationalizable probabilities for reaching an agreement under counterfactual state transitions. Numerical examples show the set of rationalizable counterfactual outcomes so recovered can be informative.
|Date of creation:||15 Oct 2009|
|Contact details of provider:|| Postal: 3718 Locust Walk, Philadelphia, PA 19104|
Web page: http://economics.sas.upenn.edu/pier
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.:
- Emmanuel Guerre & Isabelle Perrigne & Quang Vuong, 2000. "Optimal Nonparametric Estimation of First-Price Auctions," Econometrica, Econometric Society, vol. 68(3), pages 525-574, May.
- Merlo, Antonio, 1997.
"Bargaining over Governments in a Stochastic Environment,"
Journal of Political Economy,
University of Chicago Press, vol. 105(1), pages 101-131, February.
- Merlo, A., 1992. "Bargaining Over Governments in a Stochastic Environment," Working Papers 92-55, C.V. Starr Center for Applied Economics, New York University.
- Merlo, Antonio, 1996. "Bargaining over governments in a stochastic environment," Bulletins 7476, University of Minnesota, Economic Development Center.
- Yasutora Watanabe, 2005. "Learning and Bargaining in Dispute Resolution: Theory and Evidence from Medical Malpractice Litigation," 2005 Meeting Papers 440, Society for Economic Dynamics.
- Carlos Diaz-Moreno & Jose E. Galdon-Sanchez, 2000.
"Collective Bargaining under Complete Information,"
STICERD - Theoretical Economics Paper Series
401, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Daniel Diermeier & Michael Keane & Antonio Merlo, 2002.
"A Political Economy Model of Congressional Careers,"
PIER Working Paper Archive
04-037, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2004.
- Daniel Diermeier & Michael Keane & Antonio Merlo, 2005. "A Political Economy Model of Congressional Careers," American Economic Review, American Economic Association, vol. 95(1), pages 347-373, March.
- Daniel Diermeier & Michael Keane & Antonio Merlo, 2004. "A Political Economy Model of Congressional Careers," Discussion Papers 1387, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bajari, Patrick & Hong, Han & Krainer, John & Nekipelov, Denis, 2010.
"Estimating Static Models of Strategic Interactions,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 28(4), pages 469-482.
- Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, vol. 71(1), pages 27-70, January.
- Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, December.
- Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-399, March.
- David Benjamin & Mark L. J. Wright, 2009. "Recovery Before Redemption: A Theory Of Delays In Sovereign Debt Renegotiations," CAMA Working Papers 2009-15, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Hülya K. K. Eraslan, 2008. "Corporate Bankruptcy Reorganizations: Estimates From A Bargaining Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 659-681, 05.
- Athey, Susan & Haile, Philip A., 2007. "Nonparametric Approaches to Auctions," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 60 Elsevier.
- Athey,S. & Haile,P.A., 2000.
"Identification of standard auction models,"
13, Wisconsin Madison - Social Systems.
- Philip A. Haile & Han Hong & Matthew Shum, 2003.
"Nonparametric Tests for Common Values in First-Price Sealed-Bid Auctions,"
Cowles Foundation Discussion Papers
1445, Cowles Foundation for Research in Economics, Yale University.
- Philip A. Haile & Han Hong & Matthew Shum, 2004. "Nonparametric Tests for Common Values in First-Price Sealed-Bid Auctions," Working Papers 2004.149, Fondazione Eni Enrico Mattei.
- Philip A. Haile & Han Hong & Matthew Shum, 2003. "Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions," NBER Working Papers 10105, National Bureau of Economic Research, Inc.
- Laffont, Jean-Jacques & Vuong, Quang, 1996. "Structural Analysis of Auction Data," American Economic Review, American Economic Association, vol. 86(2), pages 414-420, May.
- Ran Bi, 2008. "â€œBeneficialâ€ Delays in Debt Restructuring Negotiations," IMF Working Papers 08/38, International Monetary Fund.
- Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992.
"Noncooperative models of bargaining,"
Handbook of Game Theory with Economic Applications,
in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225
- Antonio Merlo & Charles Wilson, 1997. "Efficient delays in a stochastic model of bargaining," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 39-55.
- Songnian Chen & Gordon B. Dahl & Shakeeb Khan, 2005. "Nonparametric Identification and Estimation of a Censored Location-Scale Regression Model," Journal of the American Statistical Association, American Statistical Association, vol. 100, pages 212-221, March.
- Xun Tang, 2009. "Estimating Simultaneous Games with Incomplete Information under Median Restrictions," PIER Working Paper Archive 09-023, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Haile,P.A. & Tamer,E.T., 2000.
"Inference with an incomplete model of English auctions,"
18, Wisconsin Madison - Social Systems.
- Philip A. Haile & Elie Tamer, 2003. "Inference with an Incomplete Model of English Auctions," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 1-51, February.
- Philip Haile, 2000. "Inference with an Incomplete Model of English Auctions," Econometric Society World Congress 2000 Contributed Papers 1546, Econometric Society.
- Matthew Shum, 2000. "Nonparametric Tests for Common Values," Econometric Society World Congress 2000 Contributed Papers 1598, Econometric Society.
When requesting a correction, please mention this item's handle: RePEc:pen:papers:09-037. 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: (Dolly Guarini)
If references are entirely missing, you can add them using this form.