Econometrica: Nov 1995, Volume 63, Issue 6

Negative Externalities May Cause Delay in Negotiation

https://doi.org/0012-9682(199511)63:6<1321:NEMCDI>2.0.CO;2-U
p. 1321-1335

Benny Moldovanu, Philippe Jehiel

We study the strategic equilibria of a negotiation game where potential buyers are affected by identity-dependent, negative externalities. The unique equilibrium of long, finitely repeated generic games can either display delay--where a transaction can take place only in several stages before the deadline--or, in spite of the random element in the game, a well-defined buyer exists that obtains the object with probability close to one.

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