Delays and Partial Agreements in Multi-Issue Bargaining
Avidit Raj Acharya
Princeton University - Woodrow Wilson School of Public and International Affairs
Juan Matias Ortner
Princeton University - Department of Economics
July 30, 2010
Economic Theory Center Working Paper No. 004-2010
We model a situation in which two players bargain over two issues (pies), one of which can only be resolved at a future date. We find that if the players value the issues asymmetrically (one player considers the existing issue more important than the future one, while the other player has the opposite valuation) then they may delay agreement on the first issue until the second one is finally on the table. If we allow for partial agreements, then the players never leave an issue completely unresolved. They either make a partial agreement on the first issue, and wait for the second one to emerge before completing the agreement; or they come to complete agreements on each of the issues at their earliest possible dates. We discuss applications to legislative bargaining and international trade negotiations.
Number of Pages in PDF File: 30
Keywords: Bargaining, Multiple Issues, Delay, Hold-Up, Inefficiency
JEL Classification: C73, C78
Date posted: December 22, 2010
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