Hard Bargains and Lost Opportunities

Binmore, Ken, et al

Economic Journal, 1998, vol. 108, issue 450, 1279-98

Abstract: A long tradition in economics assumes that any potential gains from trade will be exploited. This emphasis on efficiency clashes with the possibility that hard bargaining over the division of the surplus may cause some potential deals to be lost. The authors examine an Outside Option Game designed to study the tension between maximizing the size of the surplus and bargaining over the division of this surplus among those who contributed to its creation. An experimental study confirms that subjects often fail to achieve efficient outcomes. A theoretical model accounts for this behavior in terms of an equilibrium achieved in an imperfect world. Coauthors are Chris Proulx, Larry Samuelson, and Joe Swierzbinski.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (29)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecj:econjl:v:108:y:1998:i:450:p:1279-98

Ordering information: This journal article can be ordered from
http://www.blackwell ... al.asp?ref=0013-0133

Access Statistics for this article

Economic Journal is currently edited by Martin Cripps, Steve Machin, Woulter den Haan, Andrea Galeotti, Rachel Griffith and Frederic Vermeulen

More articles in Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().