Bargaining with a Possibly Committed Seller

Roman Inderst

No 99-57, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: We analyze bilateral bargaining with one-sided offers where the buyer has private information about his valuation but does not know whether the seller is committed to a known fixed price or whether it pays to hold out until he possibly reduces his offer. We make the `gap' assumption that there is a sure gain from trade, but we are mainly interested in the case where the gap becomes arbitrarily small and where the length between periods vanishes. In this case the outcome of the game with a possibly committed seller resembles (almost) perfectly the equilibrium if it is common knowledge that the seller is committed.

Pages: 21 pages
Date: 1999-04-13
Note: Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged. I benefitted from comments by Achim Wambach and seminar participants at Free University Berlin.
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Journal Article: Bargaining with a Possibly Committed Seller (2005)
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