Bargaining and Search with Incomplete Information about Outside Options

Kalyan Chatterjee, Ching Chyi Lee

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

This paper considers a model of bargaining in which the seller makes offers and the buyer can search (at a cost) for an outside option; the outside option cannot be credibly communicated, and the seller's offer is recallable by the buyer for one period. There are essentially two equilibrium regimes. For sufficiently high search cost, the game ends immediately; otherwise the search occurs in equilibrium. Compared to the case where the buyer can communicate his outside option, the seller is worse off, and the game results in search for a smaller set of values of the search cost, i.e., less equilibrium delay.C72.

Original languageEnglish (US)
Pages (from-to)203-237
Number of pages35
JournalGames and Economic Behavior
Volume22
Issue number2
DOIs
StatePublished - Feb 1998

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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