Sequential Bargaining without a Common Prior on the Recognition Process
Massachusetts Institute of Technology (MIT) - Department of Economics
MIT Department of Economics Working Paper No. 01-43
We analyze a sequential bargaining model, where players are allowed to hold different beliefs about which players will make an offer and when. Excessive optimism about making offers in the future can cause a delay in agreement. Despite this, the main result states that, if players will remain sufficiently optimistic for a sufficiently long future, then in equilibrium they will agree immediately.
Number of Pages in PDF File: 41
Keywords: Bargaining, Misperceptions, Optimism, Deadline effect
JEL Classification: C73, C78, D84
Date posted: December 11, 2001