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Robust Predictions in Coasian Bargaining†

Robust Predictions in Coasian Bargaining† AbstractThis paper studies robust predictions when players may have additional information in an otherwise standard seller-offer bargaining with private values. Players’ extra information gives rise to higher-order uncertainties about the underlying surplus. We show that the equilibrium outcomes in the frequent-offer limit depend critically on the nature of second-order uncertainty: (i) when the seller’s beliefs about the buyer’s values are public, the limiting equilibrium outcomes are efficient and any surplus division is possible; (ii) when the seller’s beliefs are private, any feasible and individually rational payoffs can be the limiting equilibrium payoffs.(JEL C78, D82, D83) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review: Insights American Economic Association

Robust Predictions in Coasian Bargaining†

American Economic Review: Insights , Volume 4 (2) – Jun 1, 2022

Robust Predictions in Coasian Bargaining†

American Economic Review: Insights , Volume 4 (2) – Jun 1, 2022

Abstract

AbstractThis paper studies robust predictions when players may have additional information in an otherwise standard seller-offer bargaining with private values. Players’ extra information gives rise to higher-order uncertainties about the underlying surplus. We show that the equilibrium outcomes in the frequent-offer limit depend critically on the nature of second-order uncertainty: (i) when the seller’s beliefs about the buyer’s values are public, the limiting equilibrium outcomes are efficient and any surplus division is possible; (ii) when the seller’s beliefs are private, any feasible and individually rational payoffs can be the limiting equilibrium payoffs.(JEL C78, D82, D83)

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Publisher
American Economic Association
Copyright
Copyright © 2022 © American Economic Association
ISSN
2640-205X
eISSN
2640-2068
DOI
10.1257/aeri.20210144
Publisher site
See Article on Publisher Site

Abstract

AbstractThis paper studies robust predictions when players may have additional information in an otherwise standard seller-offer bargaining with private values. Players’ extra information gives rise to higher-order uncertainties about the underlying surplus. We show that the equilibrium outcomes in the frequent-offer limit depend critically on the nature of second-order uncertainty: (i) when the seller’s beliefs about the buyer’s values are public, the limiting equilibrium outcomes are efficient and any surplus division is possible; (ii) when the seller’s beliefs are private, any feasible and individually rational payoffs can be the limiting equilibrium payoffs.(JEL C78, D82, D83)

Journal

American Economic Review: InsightsAmerican Economic Association

Published: Jun 1, 2022

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