On the role of confidentiality and deadlines in bilateral negotiations

Silvana Krasteva and Huseyin Yildirim

Games and Economic Behavior, 2012, vol. 75, issue 2, 714-730

Abstract: The preference between public and private negotiations for a buyer who sequentially visits two sellers is examined. It is shown that the buyer (weakly) prefers private negotiations so as to create strategic uncertainty about the trade history. With substitute goods, such uncertainty is valuable only when price offers have short deadlines that prevent a head-to-head competition. With complementary goods, strategic uncertainty is valuable to the extent that price coordination becomes a concern for sellers, which is likely to be the case when sellers possess high bargaining powers; their price offers have short deadlines; and/or goods are weak complements. Sellersʼ strategic deadline choices as well as their incentives to disclose information about negotiations are also investigated.

Keywords: Public negotiations; Private negotiations; Exploding offers; Open-ended offers; Bargaining power (search for similar items in EconPapers)
JEL-codes: C70 L23 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:75:y:2012:i:2:p:714-730

DOI: 10.1016/j.geb.2012.01.009

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