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Robust Predictions in Coasian Bargaining

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  • Heng Liu

Abstract

This paper studies robust predictions when players may have additional information in an otherwise standard seller-offer bargaining with private values. Players' extra information gives rise to higher-order uncertainties about the underlying surplus. We show that the equilibrium outcomes in the frequent-offer limit depend critically on the nature of second-order uncertainty: (i) when the seller's beliefs about the buyer's values are public, the limiting equilibrium outcomes are efficient and any surplus division is possible; (ii) when the seller's beliefs are private, any feasible and individually rational payoffs can be the limiting equilibrium payoffs.

Suggested Citation

  • Heng Liu, 2022. "Robust Predictions in Coasian Bargaining," American Economic Review: Insights, American Economic Association, vol. 4(2), pages 209-222, June.
    • Handle: RePEc:aea:aerins:v:4:y:2022:i:2:p:209-22
    DOI: 10.1257/aeri.20210144
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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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