Consider a contract over trade in continuous time between two players, according to which one player makes a payment to the other in exchange for an exogenous service. At each point in time, either player may unilaterally require an adjustment to the contract payment, involving adjustment costs...

We introduce aggregate uncertainty into a Rubinstein and Wolinsky (1985)-type dynamic matching and bilateral bargaining model. The market can be either in a high state, where there are more buyers than sellers, or in a low state, where there are more sellers than buyers. Traders do not know the...

We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents' actions and maximize...

We provide an evolutionary foundation to evidence that in some situations humans maintain either optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents' actions and...

This paper complements the existing literature on auditor-client negotiations by providing insights on the auditors' and clients' preferences for distributive negotiation strategies in an economic setting where negotiations may fail even if a common negotiation range exists. The analysis reveals...

I show that in noncooperative bargaining between two players with risk aversion, the more risk averse player always obtains a larger equilibrium payoff, after controlling for the other sources of advantage in bargaining e.g. patience and order of bargaining. I contrast my result with that of...

We develop a theory of negotiation in which deals have multiple dimensions that can be bundled together. We use theory and experiments to show that in such settings efficient trade is possible even with substantial asymmetric information. The benefits of identifying areas of mutual gain guide...

Case studies of cartels and recent theory suggest that repeated communication is key for stable cooperation in environments where signals about others' actions are noisy. However, empirically the exact role of communication is not well understood. We study cooperation under different monitoring...

Human behavior, rational or irrational one, influences one of the most complex markets worldwide: the insurance market. In most situations, insurance markets are not competitive and risk neutral insurers negotiate under asymmetric information with actors who exhibit risk aversion. In this paper...

The incentive to call for contract renewal to adjust prices is considered from a bilateral perspective in a setting where changes in outside opportunities drive the incentive to renew contracts and costs preclude continuous renewal. A model encompassing several contract forms is formulated, and...