IDEAS home Printed from
   My bibliography  Save this paper

Buying the Option to say "No"


  • Lang, Gunther


We analyze a simple model of bilateral bargaining under asymmetric information where the seller of an object can not simply say "no" by default to a buyer who is supposed to make a take-it-or-leave-it oer. Rather, he must acquire this option before the actual bargaining process begins. This choice is observable to the buyer, and hence, the seller's prebargaining action might signal private information. We develop a complete characterization of Perfect Bayesian Equilibrium in pure and (strictly) mixed strategies for this game. Then the model is compared to a standard bargaining setting in terms of the realization of welfare enhancing propertyright changes.

Suggested Citation

  • Lang, Gunther, 2000. "Buying the Option to say "No"," FEUNL Working Paper Series wp397, Universidade Nova de Lisboa, Faculdade de Economia.
  • Handle: RePEc:unl:unlfep:wp397

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Andrew Mair, 1999. "Learning from Honda," Journal of Management Studies, Wiley Blackwell, vol. 36(1), pages 25-44, January.
    2. Scott Morton, Michael, 1995. "Emerging organizational forms: Work and organization in the 21st century," European Management Journal, Elsevier, vol. 13(4), pages 339-345, December.
    3. Gherardi, Silvia, 1998. "Competence -- The Symbolic Passe-Partout To Change In A Learning Organization," Scandinavian Journal of Management, Elsevier, vol. 14(4), pages 373-393, December.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Bargaining; Signalling;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation


    Access and download statistics


    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:unl:unlfep:wp397. 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: (Sean Story). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.