Bargaining under two-sided incomplete information: The unrestricted offers case

Kalyan Chatterjee, Larry Samuelson

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Chattetjee and Samuelson (1987) recently examined a noncooperative game-theoretic bargaining model with two-sided incomplete information and an infinite horizon. Results were obtained from the model with the help of restrictions on agents' strategies. This paper examines the model without these restrictions. By doing so, we will gain some insight into whether these results are robust, in the sense that they do not depend upon the special structure of the model, and hence, might provide useful theoretical foundations for applied work. We find that the basic results generalize. As with the restricted model. we find an equilibrium in which bargaining will proceed for a finite but endogeneously determined number of stages. A terminal condition on the equilibrium sequence of agents' beliefs determines the properties of the equilibrium and allows comparative static results to be obtained. These include the finding that agents are more likely to capture a large share of the potential gains from bargaining if they exhibit characteristics that can be readily interpreted as giving them more bargaining power. Unlike the restricted model, this equilibrium is not unique, though we argue that it is plausible.

Original languageEnglish (US)
Title of host publicationBargaining in the Shadow of the Market
Subtitle of host publicationSelected Papers on Bilateral and Multilateral Bargaining
PublisherWorld Scientific Publishing Co.
Pages203-216
Number of pages14
ISBN (Electronic)9789814447577
ISBN (Print)9814447560, 9789814447560
DOIs
StatePublished - Jan 1 2013

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics, Econometrics and Finance(all)
  • Mathematics(all)

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