Bargaining with a Possibly Committed Seller

Roman Inderst

Review of Economic Dynamics, 2005, vol. 8, issue 4, 927-944

Abstract: We consider negotiations with an open time horizon where a buyer has private information about his valuation and does not know whether the seller is committed to the advertised price. This setting combines two common specifications made in the noncooperative bargaining literature: one side is privately informed about its valuation, which is drawn from a continuum, and the other side is possibly committed to a fixed offer. We analyze the game both in discrete and in continuous time and show convergence of the two settings, which extends results from Abreu and Gul (2000). One interesting result is that as time proceeds, the non-committed seller becomes less likely to concede in a given period, i.e., it appears as if he becomes more 'stubborn' further show that a seller may prefer to negotiate with a âworseâ as this enhances the value of his possible commitment. (Copyright: Elsevier)

Keywords: Bargaining; Commitment; Coase Conjecture (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1016/j.red.2005.02.002

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