Over-Confidence may Reduce Negotiation Delay

30 Pages Posted: 23 May 2010

See all articles by Alberto Galasso

Alberto Galasso

University of Toronto - Rotman School of Management; University of Toronto - Strategic Management

Date Written: February 2, 2010

Abstract

When a seller negotiates with multiple buyers, how does over-confidence affect the timing of trade? In this paper we distinguish between over-confidence about trade opportunities and over-confidence about the terms of trade. In bargaining environments without externalities both types of over-confidence can cause delays in agreement. If externalities are present the two forms of subjective bias have very different impacts on delay. In particular, over-confidence about trade opportunities may reduce bargaining delay.

Keywords: Bargaining, Over-Confidence, Externalities

JEL Classification: C78, D62

Suggested Citation

Galasso, Alberto, Over-Confidence may Reduce Negotiation Delay (February 2, 2010). Available at SSRN: https://ssrn.com/abstract=1613328 or http://dx.doi.org/10.2139/ssrn.1613328

Alberto Galasso (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/facbios/viewFac.asp?facultyID=alberto.galasso

University of Toronto - Strategic Management ( email )

105 St George Street
Toronto, ON M5S 1L2
Canada

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