Unobserved-Offers Bargaining

Alexander Wolitzky

American Economic Review, 2023, vol. 113, issue 1, 136-73

Abstract: I study ultimatum bargaining with imperfectly observed offers. Imperfectly observed offers must be rejected with positive probability, even when the players' preferences are common knowledge. Noisier observations imply a greater risk of rejection. In repeated ultimatum bargaining, the responding party can obtain a positive payoff if his signal of the opponent's offer is also observed by the opponent herself, but not if his signal is private. In alternating-offers bargaining, a player is better off when her own offers are observed more precisely and her opponent's offers are observed less precisely. Possible applications include international relations, regulation, principal-agency, and product quality provision.

JEL-codes: C73 C78 D82 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/aer.20211524

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