Bargaining and Search: An Experimental Study

We study experimentally two versions of a model in which a buyer and a seller bargain over the price of a good; however, the buyer can choose to leave the negotiation table to search for other alternatives. Under one version, if the buyer chooses to search for a better price, the opportunity to purchase the good at the stated price is gone. Under the second version, the seller guarantees the same price if the buyer chooses to return immediately after a search (presumably because a better price could not be found). In both cases, the buyer has a fairly good idea about what to expect from the search, but because the search is costly, he has to weigh the potential benefits of the search against its cost. It turns out (theoretically) that adding search to a simple bargaining mechanism eliminates some unsatisfactory features of bargaining theory. Our experiment reveals that the model can account for some (but not all) of the behavioral regularities. In line with recent developments in behavioral decision theory and game theory, which assume bounded rationality and preferences over the relative division of a surplus, we find that subjects follow simple rules of thumb and distributional norms in choosing strategies, which are reflected in the behavioral consistencies observed in this study.Bargaining, search, outside option, ultimatum game

Decentralised bilateral trading in a market with incomplete information

types: ArticleDiscussion paperWe study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value. There are two identical buyers and another seller, whose valuation is commonly known to be in between the two possible valuations of the informed seller. We consider two in nite horizon games, with public and private simultaneous one-sided o¤ers respectively and simultaneous responses. We show that there is a stationary perfect Bayes equilibrium for both models such that prices in all transactions converge to the same value as the discount factor goes to 1

Bilateral trading and incomplete information: Price convergence in a small market (working paper)

We study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value. In addition to this informed seller, there are two identical buyers and another seller, whose valuation is commonly known to be in between the two possible valuations of the informed seller. We consider an infinite horizon game with simultaneous one-sided offers and simultaneous responses. We characterise one PBE of the game and show that, as the discount factor goes to 1, prices in all transactions converge to the same value. We then show that this is the case with any stationary equilibrium of the game. That is, the asymptotic outcome is unique across all stationary equilibria.We thank the Human Capital Foundation (www.hcfoundation.ru), and especially Andrey P. Vavilov, for support to The Pennsylvania State University’s Department of Economics. Dr Chatterjee would also like to thank the Institute for Advanced Study, Princeton, and the Richard B. Fisher endowment for financial support of his membership of the Institute during the year 2014-15

Noncooperative Models of Bargaining

Chapter 07 in Handbook of Game Theory with Economic Applications, 1992, vol. 1, pp 179-225 from ElsevierCenter for Research on Economic and Social Theory, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/100631/1/ECON108.pd

Essays in voluntary disclosure and information sharing

El objetivo de esta tesis es identificar y analizar nuevos factores, no investigados previamente por la literatura contable, que incentiven la revelación voluntaria de información. Puesto que las consecuencias de revelar información varían en función del entorno en el que dicha información es revelada, el presente análisis se realizará desde dos perspectivas distintas: revelar información al mercado en general y compartir información con socios comerciales. En el primer capítulo exploramos como la propensión a revelar información al mercado es influenciada por la forma en que otras organizaciones han revelado información en el pasado. De esta forma, nuestros resultados muestran que las firmas imitan a otras empresas el mismo hecho de revelar la información independientemente del contenido, pero en función de dos factores: la incertidumbre y la lucha por mantener su posición competitiva en el mercado. Además, la segunda razón parece ser dominante. En el segundo capítulo, se analiza el flujo interno de información durante negociaciones entre socios comerciales. Específicamente exploramos como las penalizaciones por acuerdos tardíos modifican la usualmente asumida relación negativa entre el poder de negociación de los socios comerciales y su disposición a compartir información. Nuestros resultados soportan la idea de que la interacción entre las penalizaciones por acuerdos tardíos y el poder de negociación de los socios comerciales genera incentivos que son capaces de disminuir, al menos en cierto grado, el efecto negativo del poder de negociación sobre la disposición a dar informaciónThe global motivation for this work is the identification and analysis of unexplored factors driving firm’s voluntary disclosure of strategic information. Since the motivation and consequences of disclosing information change according to the disclosure environment, we conduct our analysis from two different perspectives: disclosing information to markets and sharing information internally with commercial partners. In the first essay we explore how firms’ propensity to disclose information to the market is influenced by the previous disclosing behavior of other players in the market. Our results show that firms imitate their peers both to deal with uncertainty as well as for competitive reasons. Nevertheless, however, the second reason tends to be dominant. In the second essay, we analyze the internal information flow during negotiations between commercial partners. Specifically, we explore how penalties for delay influence the usually found negative relation between traders’ bargaining power and their willingness to share accounting information during negotiations. Our results support our main thesis, and we conclude that the interaction between the penalizations for delay and the bargaining power are able to create, at least to some extent, incentives to diminish the negative effects of bargaining power over information sharingPresidente: Salvador Carmona Moreno; Vocal: Carlos Larrinaga González; Secretario: David Naranjo Gi