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Bargaining over Contingent Contracts Under Incomplete Information

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  • Geoffroy de Clippel
  • Jack Fanning
  • Kareen Rozen

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)ís axiomatic solution. Furthermore, all limits must be interim-efficient if equilibria are required to be sequential. Results extend to other bargaining protocols.

Suggested Citation

  • Geoffroy de Clippel & Jack Fanning & Kareen Rozen, 2020. "Bargaining over Contingent Contracts Under Incomplete Information," Working Papers 2020-13, Brown University, Department of Economics.
    • Handle: RePEc:bro:econwp:2020-13
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    References listed on IDEAS

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    Cited by:

    1. Zhuo Wenjun, 2023. "Circulation Expectations, Farmer Trust, and Farmers’ Contract Choice Behavior," Land, MDPI, vol. 12(8), pages 1-15, August.

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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
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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