Economic Theory - Duygu Yengin (University of Adelaide)

ETES Series

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Georgy Artemov

Title: When and with Whom to Negotiate:  Endogenous Agenda under Quota Rule

Abstract: We study the complete information,  non-cooperative bargaining  between one party (buyer) with several parties (sellers) with different bargaining powers where the cooperation of all parties are needed in order to reap any economic gains.  We introduce a new feature to such bargaining problems and assume that the agreement of certain percentage of sellers is enough to complete the project. We assume both the buyer and the sellers have both inside and outside options, and sellers' different bargaining powers arise from the heterogeneity in their options. Hence, the buyer has an incentive to strategically choose which seller to bargain with in order to maximize her payoff. Under finite and infinite horizon models, we characterize subgame perfect equilibria when the buyer chooses the optimal agenda.