Negotiation statements with promise and threat

Jin Yeub Kim ()
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Jin Yeub Kim: Yonsei University

Review of Economic Design, 2022, vol. 26, issue 2, No 1, 149-164

Abstract: Abstract A negotiator, in order to achieve her goal, must induce an agent to cooperate. The agent faces costs or risks for cooperating. I develop a game-theoretic model where the negotiator may issue a negotiation statement that contains a threat of punishment for non-cooperation and a promise of reward for cooperation; after which the agent must choose either to cooperate or not. I derive necessary and sufficient conditions under which combining a threat with a promise is effective and credible in inducing the agent’s full cooperation. I discuss insights from the model in the context of two applications. My analysis provides a rationale for the use of both promise and threat in negotiations to establish cooperation, increasing the chance of achieving the negotiator’s goal.

Keywords: Negotiation; Cooperation; Promises; Threats; C72; D82; F51 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10058-021-00261-8

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