Sequential bargaining with pure common values

Paul Schweinzer

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We study the alternating-offers bargaining problem of assigning an indivisible and commonly valued object to one of two players in return for some payment among players. The players are asymmetrically informed about the object’s value and have veto power over any settlement. There is no depreciation during the bargaining process which involves signalling of private information. We characterise the perfect Bayesian equilibrium of this game which is essentially unique if offers are required to be strictly increasing. Equilibrium agreement is reached gradually and nondeterministically. The better informed player obtains a rent.

Keywords: Sequential bargaining; Common values; Incomplete information; Repeated games (search for similar items in EconPapers)
JEL-codes: C73 C78 D44 D82 J12 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-gth
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