Bargaining over Contingent Contracts under Incomplete Information
American Economic Review
vol. 112,
no. 5, May 2022
(pp. 1522-54)
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. Under mild regularity conditions, we show all interim-efficient limits belong to Myerson's (1984) axiomatic solution. Furthermore, all limits must be interim efficient if equilibrium beliefs satisfy no-signaling-what-you-don't-know. Results extend to other bargaining protocols.Citation
de Clippel, Geoffroy, Jack Fanning, and Kareen Rozen. 2022. "Bargaining over Contingent Contracts under Incomplete Information." American Economic Review, 112 (5): 1522-54. DOI: 10.1257/aer.20201026Additional Materials
JEL Classification
- C78 Bargaining Theory; Matching Theory
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D86 Economics of Contract: Theory