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On the Role of Confidentiality and Deadlines in Bilateral Negotiations
Games and Economic Behavior (2012)
  • Silvana Krasteva, Texas A & M University - College Station
  • Huseyin Yildirim, Duke University
Abstract
The preference between public and private negotiations for a buyer who sequentially visits two sellers is examined. It is shown that the buyer (weakly) prefers private negotiations so as to create strategic uncertainty about the trade history. With substitute goods, such uncertainty is valuable only when price offers have short deadlines that prevent a head-to-head competition. With complementary goods, strategic uncertainty is valuable to the extent that price coordination becomes a concern for sellers, which is likely to be the case when sellers possess high bargaining powers; their price offers have short deadlines; and/or goods are weak complements. Sellersʼ strategic deadline choices as well as their incentives to disclose information about negotiations are also investigated.
Disciplines
Publication Date
2012
Citation Information
Silvana Krasteva and Huseyin Yildirim. "On the Role of Confidentiality and Deadlines in Bilateral Negotiations" Games and Economic Behavior Vol. 75 Iss. 2 (2012) p. 714 - 730
Available at: http://works.bepress.com/huseyin_yildirim/3/