Title

ONE-SIDED UNCERTAINTY AND DELAY IN REPUTATIONAL BARGAINING

Author(s)

Dilip Abreu Dilip Abreu (Princeton University)

David Pearce David Pearce (New York University)

Ennio Stacchetti Ennio Stacchetti (New York University)

Abstract

A two-person infinite-horizon bargaining model where one of the players may have either of two discount factors, has a multiplicity of perfect Bayesian equilibria. Introducing the slightest possibility that either player may be one of a rich variety of stationary behavioral types singles out a particular solution and appears to support some axiomatic treatments in the early literature. Perturbing the model with a slightly broader class of behavioral types that allows the informed player to delay making his initial demand again achieves powerful equilibrium refinement. But there is substantial delay to agreement, and predictions depend continuously on the ex ante probabilities of the patient and impatient types of the informed player, counter to what the literature suggests.

Creation Date

2012-10

Section URL ID

ET

Paper Number

wp045_2012_Abreu_Pearce_Stacchetti_One%20Sided%20Uncertainty.pdf

URL

http://detc.princeton.edu/wp-content/uploads/2016/11/wp045_2012_Abreu_Pearce_Stacchetti_One-Sided-Uncertainty.pdf

File Function

Jel

C010, C020, C700, D010

Keyword(s)

model, players, game theory, Bayesian equilibria, stationary behavior, xiomatic treatment

Suppress

false

Series

10