The Efficiency of Negotiations with Uncertainty and Multi-Dimensional Deals

58 Pages Posted: 30 Apr 2018 Last revised: 24 Feb 2020

See all articles by Matthew O. Jackson

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute

Hugo Sonnenschein

Stanford University - Department of Economics

Yiqing Xing

Johns Hopkins University - Carey Business School

Christis Tombazos

Monash University - Department of Economics

Omar Al-Ubaydli

George Mason University - Department of Economics

Date Written: April 1, 2018

Abstract

We develop a theory of negotiation in which deals have multiple dimensions that can be bundled together. We use theory and experiments to show that in such settings efficient trade is possible even with substantial asymmetric information. The benefits of identifying areas of mutual gain guide agents away from posturing and manipulating their share of the pie, and instead to finding the deals that maximize their mutual gains from trade.

Keywords: Negotiation, Bargaining, Exchange, Trade, Multiple Items, Linking, Efficiency, Experiment

JEL Classification: A13, C72, C78, D47, D82, C92

Suggested Citation

Jackson, Matthew O. and Sonnenschein, Hugo and Xing, Yiqing and Tombazos, Christis G. and Al-Ubaydli, Omar, The Efficiency of Negotiations with Uncertainty and Multi-Dimensional Deals (April 1, 2018). Available at SSRN: https://ssrn.com/abstract=3153853 or http://dx.doi.org/10.2139/ssrn.3153853

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
1-650-723-3544 (Phone)

HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
United States

Hugo Sonnenschein

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Yiqing Xing

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://yiqingxing.com

Christis G. Tombazos

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3
Australia

Omar Al-Ubaydli

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-4538 (Phone)
703-993-1133 (Fax)

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