Bargaining over Contingent Contracts Under Incomplete Information

59 Pages Posted: 25 Feb 2020

See all articles by Geoffroy de Clippel

Geoffroy de Clippel

Brown University - Department of Economics

Jack Fanning

Brown University, Economics

Kareen Rozen

Brown University - Department of Economics

Date Written: December 1, 2019

Abstract

We study bargaining over contingent contracts in problems where private information becomes public or verifiable when the time comes to implement the agreement. We suggest a simple, two-stage game that incorporates important aspects of bargaining. We characterize equilibria in which parties always reach agreement, and study their limits as bargaining frictions vanish. We show that under mild regularity conditions, all interim-efficient limits belong to Myerson (1984)’s axiomatic solution. Furthermore, all limits must be interim-efficient if equilibria are required to be sequential. Results extend to other bargaining protocols.

Suggested Citation

de Clippel, Geoffrey and Fanning, Jack and Rozen, Kareen, Bargaining over Contingent Contracts Under Incomplete Information (December 1, 2019). Available at SSRN: https://ssrn.com/abstract=3527102 or http://dx.doi.org/10.2139/ssrn.3527102

Geoffrey De Clippel (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Jack Fanning

Brown University, Economics ( email )

Box 1860
Providence, RI 02912
United States

HOME PAGE: http://https://sites.google.com/a/brown.edu/jfanning/home

Kareen Rozen

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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