Econometrica: May 1988, Volume 56, Issue 3
On Delay in Bargaining with One-Sided Uncertainty
Faruk Gul, Hugo SonnenscheinRecently, attention has been given to a model of two-person bargaining in which the parties alternate making offers and there is uncertainty about the valuation of one party. The purpose of the analysis has been to identify delay to agreement with a screening process, where agents with relatively lower valuations distinguish themselves by waiting longer to settle. We point out a fundamental difficulty with this program by demonstrating that the assumptions used in the literature allow for delay only in so far as the time between offers is significant.
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