[A seller and a buyer make offers and counteroffers to one another until they reach an agreement, or else one side decides to terminate the negotiations. Neither side knows the value of the other of reaching an agreement. It is shown,using the concept of sequential equilibrium, that if there are known fixed costs in bargaining, then the bargaining must terminate in a single round. The side with the lower costs of waiting makes an offer which the other side either accepts or rejects by terminating the bargaining.]

A step toward a strategic foundation for rational expectations equilibrium is taken by considering a double auction with n buyers and m sellers with interdependent values and a ¢ liated private information. If there are su ¢ ciently many buyers and sellers, and their bids are restricted to a su ¢ ciently …ne discrete set of prices, then, generically, there is an equilibrium in nondecreasing bidding functions that is arbitrarily close to the unique fully revealing rational expectations equilibrium of the limit market with unrestricted bids and a continuum of agents. In particular, the large double auction equilibrium is almost e ¢ cient and almost fully aggregates the agents’information. 1.

It is shown that the linkage principle (Milgrom and Weber (1982)) does not extend to the multi-unit auction setting. An analysis of the equilibium bidding strategies is carried out for the general two-agent/two-unit Vickrey auction in order to provide economic insight into the nature of the failure.

A noncooperative implementation of the core is provided for games with transferable utility. The implementation obtained here is meant to reflect the standard motivation for the core as closely as possible. In the model proposed, time is continuous. This idealized treatment of time is most amenable for capturing an essential feature of the core - there is always time to reject a noncore proposal before it is consumated.