BARGAINING UNDER TWO-SIDED INCOMPLETE INFORMATION: THE UNRESTRICTED OFFERS CASE

Kalyan Chatterjee and Larry Samuelson
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Kalyan Chatterjee: Pennsylvania State University, University Park, Pennsylvania, USA
Larry Samuelson: Pennsylvania State University, University Park, Pennsylvania, USA

Chapter 10 in Bargaining in the Shadow of the Market:Selected Papers on Bilateral and Multilateral Bargaining, 2013, pp 203-216 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractChatterjee and Samuelson (1987) recently examined a noncooperative game-theoretic bargaining model with two-sided incomplete information and an infinite horizon. Results were obtained from the model with the help of restrictions on agents' strategies. This paper examines the model without these restrictions. By doing so, we will gain some insight into whether these results are robust, in the sense that they do not depend upon the special structure of the model, and hence, might provide useful theoretical foundations for applied work. We find that the basic results generalize. As with the restricted model. we find an equilibrium in which bargaining will proceed for a finite but endogeneously determined number of stages. A terminal condition on the equilibrium sequence of agents' beliefs determines the properties of the equilibrium and allows comparative static results to be obtained. These include the finding that agents are more likely to capture a large share of the potential gains from bargaining if they exhibit characteristics that can be readily interpreted as giving them more bargaining power. Unlike the restricted model, this equilibrium is not unique, though we argue that it is plausible.

Keywords: Bilateral Bargaining; Noncooperative Theory of Coalitional Bargaining; Political Negotiations; Multilateral Bargaining; Coalitional Bargaining; Arbitration; Dynamic Model of Negotiation (search for similar items in EconPapers)
Date: 2013
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