Journal Article

Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations

Thomas H. Noe and Jun Wang

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 71, issue 3, pages 855-881
Published in print July 2004 | ISSN: 0034-6527
Published online July 2004 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2004.00307.x
Fooling All of the People Some of the Time: A Theory of Endogenous Sequencing in Confidential Negotiations

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  • Game Theory and Bargaining Theory
  • Information, Knowledge, and Uncertainy

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We analyse a bargaining game in which one party, called the buyer, has the option of choosing the sequence of negotiations with other participants, called sellers. When the sequencing of negotiations is confidential and the sellers' goods are highly complementary, efficient, non-dissipative equilibria exist in which the buyer randomizes over negotiation sequences. In these equilibria, the buyer can obtain higher pay-offs than in pure strategy equilibria or in public negotiations. The degree of sequencing uncertainty that maximizes buyer pay-offs is inversely related to the aggregate bargaining power of the sellers.

Keywords: C78; D82

Journal Article.  15214 words.  Illustrated.

Subjects: Game Theory and Bargaining Theory ; Information, Knowledge, and Uncertainy

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