ISSN:
1432-1270
Keywords:
Key words: Bargaining
;
signaling
;
delay
;
two-sided uncertainty
Source:
Springer Online Journal Archives 1860-2000
Topics:
Mathematics
,
Economics
Notes:
Abstract. In this paper, we analyze the class of all smooth separating sequential equilibria in a continuous-time bargaining model with two-sided uncertainty. Trade between players occurs whenever there is surplus to be shared and delay is used to signal their valuations. When the buyer and the seller have a common discount rate, we show that the final outcome is unique among all these equilibria: the difference between the highest possible buyer's valuation and the lowest possible seller's valuation always narrows down at a rate exactly equal to the discount rate. When their discount rates differ, the more patient side always reveals his valuation first in the unique smooth separating equilibrium.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/s001820000037
