Bargaining Foundations for the Outside Option Principle.
We study a bargaining game in which a seller can trade with one of two buyers, who have values h and l ( h > l ). The outside option principle (OOP) predicts that, as players become patient, the seller trades with the high-value buyer with probability converging to 1 at a price converging to max (...
| Publicado en: | Review of Economic Studies Vol. 93; no. 2; pp. 725 - 763 |
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| Autores principales: | , |
| Formato: | Artículo |
| Publicado: |
Oxford University Press / USA
Mar2026
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=192334037&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 192334037 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00346527 REM jtl: Review of Economic Studies issn: 00346527 maglogo: N pubinfo: dt: Mar2026 vid: 93 iid: 2 pid: 622 pub: Oxford University Press / USA artinfo: ui: 192334037 10.1093/restud/rdaf053 ppf: 725 ppct: 38 formats: tig: atl: Bargaining Foundations for the Outside Option Principle. aug: au: Abreu, Dilip Manea, Mihai affil: New York University, USA Stony Brook University, USA su: Negotiation Equilibrium Matching theory sug: subj: Negotiation Equilibrium Matching theory keyword: Bargaining Bargaining protocol copyrightHolder:Review of Economic Studies Ltd copyrightYear:2026 Delay Efficiency inLanguage:en Markov perfect equilibrium Outside option principle publisher:Oxford University Press Refinements sameAs:https://dx.doi.org/10.1093/restud/rdaf053 Bargaining Bargaining protocol copyrightHolder:Review of Economic Studies Ltd copyrightYear:2026 Delay Efficiency inLanguage:en Markov perfect equilibrium Outside option principle publisher:Oxford University Press Refinements sameAs:https://dx.doi.org/10.1093/restud/rdaf053 ab: We study a bargaining game in which a seller can trade with one of two buyers, who have values h and l ( h > l ). The outside option principle (OOP) predicts that, as players become patient, the seller trades with the high-value buyer with probability converging to 1 at a price converging to max (h / 2 , l) . While this prediction is supported by the Markov perfect equilibrium (MPE), a wide range of trading outcomes may emerge in subgame perfect equilibria (SPEs): in the patient limit, the seller can obtain any price in the interval [ h / 2 , h ] (and no other); moreover, allocative inefficiency and costly delay are possible. We propose equilibrium refinements less restrictive than Markov behavior that guarantee trading outcomes consistent with the OOP. One refinement requires that a buyer's relative probability of trade does not increase dramatically following a failed negotiation with that buyer. Another refinement posits that the seller does not approach a buyer hoping that negotiations fail. SPEs satisfying both refinements conform with the OOP (but need not be MPEs). Our benchmark model features strategic matching by the seller. We provide a parallel analysis for the random matching protocol. Under random matching, prices in SPEs may also rise above and fall below l , but have a narrower range. A refinement particular to this protocol that restores the OOP requires that a random mismatch should not impact the seller excessively. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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