Buying the Option to say "No"

Gunther Lang

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: We analyze a simple model of bilateral bargaining under asymmetric information where the seller of an object can not simply say "no" by default to a buyer who is supposed to make a take-it-or-leave-it oer. Rather, he must acquire this option before the actual bargaining process begins. This choice is observable to the buyer, and hence, the seller's prebargaining action might signal private information. We develop a complete characterization of Perfect Bayesian Equilibrium in pure and (strictly) mixed strategies for this game. Then the model is compared to a standard bargaining setting in terms of the realization of welfare enhancing propertyright changes.

Keywords: Bargaining; signalling (search for similar items in EconPapers)
JEL-codes: D23 D82 L14 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2000
References: Add references at CitEc
Citations:

Downloads: (external link)
https://run.unl.pt/bitstream/10362/83628/1/WP397.pdf

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:unl:unlfep:wp397

Access Statistics for this paper

More papers in Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Susana Lopes ().