Open- versus Closed-Door Negotiations
We examine a noncooperative bargaining between two agents, one of whom (agent 1) represents a constituency. Under "closed-door" bargaining, constituents must approve the final bargaining agreement. In the "open-door" case, constituents may also terminate bargaining after intermediate offers have been made and rejected. A "learning effect" and a "termination effect" arise in open-door bargaining. The former increases and the latter decreases the payoff to agent 2 from rejecting offers. The termination effect dominates, making agent 2 less likely to reject offers and hence making agent 1 more aggressive in the open-door case.
Year of publication: |
1994
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Authors: | Perry, Motty ; Samuelson, Larry |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 25.1994, 2, p. 348-359
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Publisher: |
The RAND Corporation |
Saved in:
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