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Alternating-offer bargaining with the global games information structure

Anton Tsoy ()
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Anton Tsoy: Department of Economics, Einaudi Institute for Economics and Finance

Theoretical Economics, 2018, vol. 13, issue 2

Abstract: In this study, I examine the alternating-offer bilateral bargaining model with private correlated values. The correlation of values is modeled via the global games information structure. I focus on the double limits of perfect Bayesian equilibria as offers become frequent and the correlation approaches perfect. I characterize the Pareto frontier of the double limits and show that it is efficient, but the surplus split generally differs from the Nash Bargaining split. I then construct a double limit that approximates the Nash Bargaining split in the ex-post surplus, but with a delay. Further, I prove the Folk theorem when the range of the buyer's values coincides with the range of the seller's costs: any feasible and individually rational ex-ante payoff profile can be approximated by a double limit.

Keywords: Bargaining delay; alternating offers; incomplete information; private correlated values; Coase conjecture; global games (search for similar items in EconPapers)
JEL-codes: C78 D82 (search for similar items in EconPapers)
Date: 2018-05-29
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