Alternating offer bargaining with endogenous information : timing and surplus division

Dang, Tri Vi

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URN: urn:nbn:de:bsz:180-madoc-26228
Document Type: Working paper
Year of publication: 2005
The title of a journal, publication series: Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
Volume: 05-39
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject: 300 Social sciences, sociology, anthropology
Classification: JEL: D83 D82 C78 ,
Subject headings (SWD): Verhandlungstheorie , Asymmetrische Information , Informationsverhalten , Theorie
Keywords (English): bargaining , delay , endogenous lemons problem , endogenous outside option , information acquisition
Abstract: Two ex ante identically informed agents play a two-period alternating offer bargaining game over the division of a known surplus with endogenous information and common values. This paper shows that a low discounting of trading surplus, a positive externality of information acquisition and an endogenous lemons problem can cause delay of agreement. In the period of disagreement the buyer and the seller have symmetric information. For the case where the discount factor d of trading surplus is zero, a perfect equilibrium exists in which the responder captures full surplus in take-it-or-leave-it offer bargaining. The equilibrium payoff of the first period proposer can increase with d, the bargaining power of the counter party.
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