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

Warning
There is a more recent version of this item available.
[thumbnail of wp_415.pdf]
Preview
Text
Download (452kB) | Preview

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)
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

Available Versions of this Item

View Item

Downloads

Downloads per month over past year