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On the role of confidentiality and deadlines in bilateral negotiations

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  • Krasteva, Silvana
  • Yildirim, Huseyin

Abstract

The preference between public and private negotiations for a buyer who sequentially visits two sellers is examined. It is shown that the buyer (weakly) prefers private negotiations so as to create strategic uncertainty about the trade history. With substitute goods, such uncertainty is valuable only when price offers have short deadlines that prevent a head-to-head competition. With complementary goods, strategic uncertainty is valuable to the extent that price coordination becomes a concern for sellers, which is likely to be the case when sellers possess high bargaining powers; their price offers have short deadlines; and/or goods are weak complements. Sellersʼ strategic deadline choices as well as their incentives to disclose information about negotiations are also investigated.

Suggested Citation

  • Krasteva, Silvana & Yildirim, Huseyin, 2012. "On the role of confidentiality and deadlines in bilateral negotiations," Games and Economic Behavior, Elsevier, vol. 75(2), pages 714-730.
    • Handle: RePEc:eee:gamebe:v:75:y:2012:i:2:p:714-730
    DOI: 10.1016/j.geb.2012.01.009
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    Cited by:

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    6. Uyanik, Metin & Yengin, Duygu, 2023. "Expropriation power in private dealings: Quota rule in collective sales," Games and Economic Behavior, Elsevier, vol. 141(C), pages 548-580.

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    More about this item

    Keywords

    Public negotiations; Private negotiations; Exploding offers; Open-ended offers; Bargaining power;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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