Review of Economic Studies Vol. 65 No. 3 1998
Alternating-Offer Bargaining with Two-Sided Incomplete Information
Abstract
I study alternating-offer bargaining games with two-sided incomplete information about the players' discount rates. For both perfect Bayesian equilibrium and a rationalizability-style notion, I characterize the set of expected payoffs which may arise in the game. I also construct bounds on agreements that may be made. The set of expected payoffs is easy to compute and incorporate into applied models. My main result is a full characterization of the set of perfect Bayesian equilibrium payoffs for games in which the distribution over the players' discount rates is of wide support, yet is in a weak sense close to a point mass distribution. I prove a lopsided convergence result: each player cannot gain from a slight chance that she is a strong type, but the player can suffer greatly if there is a slight chance that she is a weak type.
- DOI
- 10.1111/1467-937x.00058
- Volume
- 65
- Issue
- 3
- Pages
- 573-594
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref