Bargaining, search, and outside options

Anita Gantner

Games and Economic Behavior, 2008, vol. 62, issue 2, pages 417-435

Abstract: This paper studies a two-sided incomplete information bargaining model between a seller and a buyer. The buyer has an outside option, which is modeled as a sequential search process during which he can choose to return to bargaining at any time. Two cases are considered: In Regime I, both agents have symmetric information about the search parameters. We find that, in contrast to bargaining with complete information, the option to return to bargaining is not redundant in equilibrium. However, the no-delay result still holds. In Regime II, where agents have asymmetric information about the outside option, delay is possible. The solution characterizes the parameters for renegotiation and those for search with no return to the bargaining table.

Downloads: (external link)
http://www.sciencedi ... 4b1e3aeaf01890e2ef54
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

Games and Economic Behavior is edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Series data maintained by Heidi Boesdal ().