Symmetry in Bargaining and Efficient Contracts under Asymmetric Information

Arijit Sen

Studies in Microeconomics, 2017, vol. 5, issue 2, 132-142

Abstract: Abstract This paper shows that in a Spencian agency model, contract determination through alternating-offer bargaining can generate efficient outcomes. This result holds in parameter regimes in which the screening equilibrium (where the uninformed principal makes a take-it-or-leave-it offer to the agent) and the signalling equilibrium (where the informed agent makes a take-it-or-leave-it offer to the principal) both predict inefficient contracts. More generally, this paper clarifies that in negotiations under incomplete information involving interdependent values, symmetry in the bargaining protocol can limit the extent of allocation inefficiencies and can lead to ex post efficient agreements.

Keywords: Alternating-offer bargaining; interdependent values; screening; signalling (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/2321022217713094 (text/html)

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:sae:miceco:v:5:y:2017:i:2:p:132-142

DOI: 10.1177/2321022217713094

Access Statistics for this article

More articles in Studies in Microeconomics
Bibliographic data for series maintained by SAGE Publications ().