Signaling bargaining power: Strategic delay versus restricted offers
Economic Theory, 2000, vol. 16, issue 1, 227-237
I study the first-round separating equilibrium of a buyer-seller bargaining game, extended to allow for asymmetric information, strategically delayed offers and offers restricted to a portion of the good. When bargaining is over a consumption good, in equilibrium the "strong" buyer uses a restricted offer if his optimal consumption path is conservative relative to the "weak" buyer. A pure restricted offer may even be a costless, efficient signal. When the good is durable, a pure strategic delay is involved in signaling a strong bargaining position if the discount factor is high.
Keywords: Bargaining; Sequential equilibrium; Delay; ">Restrictive Agenda LANGUAGE="EN"> (search for similar items in EconPapers)
Note: Received: June 24, 1998; revised version: May 30, 1999
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