Bargaining and the Right to Remain Silent

Lawrence M Ausubel and Raymond J Deneckere

Econometrica, 1992, vol. 60, issue 3, 597-625

Abstract: This paper analyzes a class of alternating-offer bargaining games with one-sided incomplete information for the case of "no gap." If sequential equilibria are required to satisfy the additional restrictions of stationarity, monotonicity, pure strategies, and no free screening, the authors establish the silence theorem: when the time interval between successive periods is made sufficiently short, the informed party never makes any serious offers in the play of alternating-offer bargaining games. A class of parametric examples suggests that the time interval required to assure silence is not especially brief. Copyright 1992 by The Econometric Society.

Date: 1992
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