TY  - JOUR
AU  - Grossman,Sanford J.
AU  - Perry,Motty
TI  - Sequential Bargaining Under Asymmetric Information
JF  - National Bureau of Economic Research Technical Working Paper Series
VL  - No. 56
PY  - 1986
Y2  - May 1986
UR  - http://www.nber.org/papers/t0056
L1  - http://www.nber.org/papers/t0056.pdf
N1  - Author contact info:
Sanford J. Grossman
QFS Asset Management, L.P.
10 Glenville Street
Greenwich, CT 06831
Tel: 203/983-5600
Fax: 203/532-8250
E-Mail: sgrossman@qfsfunds.com
AB  - We analyze an infinite stage, alternating offer bargaining game in which the buyer knows the gains from trade but the seller does not. Under weak assumptions the game has a unique candidate Perfect Sequential Equilibrium, and it can be solved by backward induction. Equilibrium involves the seller making an offer which is accepted by buyers with high gains from trade, while buyers with medium gains reject and make a counteroffer which the seller accepts. Buyers with low gains make an unacceptable offer, and then the whole process repeats itself, Numerical simulations demonstrate the effects of uncertainty on the length of bargaining.
ER  -