AbstractI study ultimatum bargaining with imperfectly observed offers. Imperfectly observed offers must be rejected with positive probability, even when the players' preferences are common knowledge. Noisier observations imply a greater risk of rejection. In repeated ultimatum bargaining, the responding party can obtain a positive payoff if his signal of the opponent's offer is also observed by the opponent herself, but not if his signal is private. In alternating-offers bargaining, a player is better off when her own offers are observed more precisely and her opponent's offers are observed less precisely. Possible applications include international relations, regulation, principal-agency, and product quality provision.
CitationWolitzky, Alexander. 2023. "Unobserved-Offers Bargaining." American Economic Review, 113 (1): 136-73. DOI: 10.1257/aer.20211524
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- C78 Bargaining Theory; Matching Theory
- D82 Asymmetric and Private Information; Mechanism Design