Jullien, Bruno, Pouyet, Jérôme
and Sand-Zantman, Wilfried
(2013)
An Offer You Can't Refuse: Early Contracting with Endogenous Threat.
TSE Working Paper, n. 13-415, Toulouse
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Abstract
We analyze early contracting when a seller has private information on the future gains from trade and the buyer can bypass. Despite ex-post trade occurring under complete information and being efficient, early negotiation with an informed seller allows the uninformed buyer to improve her bargaining position. We show that the buyer can divide seller's types so that bypass becomes a credible threat. While some sellers accept because they gain more than by trading ex-post, others accept only because they fear that rejection would reveal too much information. Equilibrium payoffs are characterized and are shown to have a close connection with ratifiable equilibrium payoffs.
Item Type: | Monograph (Working Paper) |
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Language: | English |
Date: | May 2013 |
Place of Publication: | Toulouse |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Institution: | Université Toulouse 1 Capitole |
Site: | UT1 |
Date Deposited: | 09 Jul 2014 17:37 |
Last Modified: | 02 Apr 2021 15:48 |
OAI Identifier: | oai:tse-fr.eu:27396 |
URI: | https://publications.ut-capitole.fr/id/eprint/15674 |
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