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Delays and Partial Agreements in Multi-Issue Bargaining

30 Pages Posted: 22 Dec 2010  

Avidit Raj Acharya

Princeton University - Woodrow Wilson School of Public and International Affairs

Juan Matias Ortner

Princeton University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 30, 2010

Abstract

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.

Keywords: Bargaining, Multiple Issues, Delay, Hold-Up, Inefficiency

JEL Classification: C73, C78

Suggested Citation

Acharya, Avidit Raj and Ortner, Juan Matias, Delays and Partial Agreements in Multi-Issue Bargaining (July 30, 2010). Economic Theory Center Working Paper No. 004-2010. Available at SSRN: https://ssrn.com/abstract=1729298 or http://dx.doi.org/10.2139/ssrn.1729298

Avidit Raj Acharya (Contact Author)

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Juan Matias Ortner

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

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