Results
Title

Strategic Delay in Bargaining with Two-Sided Uncertainty.

Authors

Cramton, Peter C.

Abstract

The role of strategic delay is analyzed in an infinite-horizon alternating-offer model of bargaining. A buyer and seller are engaged in the trade of a single object. Both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly. An equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer. A bargainer expecting large gains from trade is more impatient than one expecting small gains, and hence makes concessions earlier on. Trade occurs whenever gains from trade exist, but due to the private information, only after costly delay.

Subjects

COLLECTIVE bargaining; ECONOMIC equilibrium; EQUATIONS; BUSINESS negotiation; EQUILIBRIUM; RETAIL industry; UNCERTAINTY; BUSINESS planning; BUSINESS

Publication

Review of Economic Studies, 1992, Vol 59, Issue 1, p205

ISSN

0034-6527

Publication type

Academic Journal

DOI

10.2307/2297934