Commitment through Incomplete Information in a Simple Repeated Bargaining Game

Klaus Schmidt ()

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: This paper analyzes a finitely repeated bargaining game with asymmetric information. It gives a tight characterization of the equilibrium path and the equilibrium payoffs of all sequential equilibria satisfying a weak Markov property. The method used allows for arbitrarily many different types and provides an intuitive understanding of how \"reputation\" works. It is shown that the seller can use the incomplete information about his costs to credibly threaten never to accept a price lower than his highest possible costs before the very end of the game. The result holds for any discount factor of the seller greater than 0.5. Journal of Economic LiteratureClassification Numbers: C78, D83.

Date: 1993
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Citations: View citations in EconPapers (23)

Published in Journal of Economic Theory 1 60(1993): pp. 114-139

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Related works:
Working Paper: Commitment Through Incomplete Information in a Simple Repeated Bargaining Game (2010)
Journal Article: Commitment through Incomplete Information in a Simple Repeated Bargaining Game (1993)
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