This experimental study investigates two bargaining games with twosided incomplete information between a seller and a buyer. In the first game with no outside options many subjects do not use the incomplete information to their advantage as predicted. We find that a model with adjusting priors...

A key to the Coase conjecture is the monopolist's inability to commit to a price, which leads consumers to believe that a high current price will be followed by low future prices. This paper studies the robustness of the Coase conjecture with respect to these beliefs of consumers. In particular,...

In the hold-up problem incomplete contracts cause the proceeds of relationship-specific investments to be allocated by bargaining. This paper investigates the corresponding investment incentives if individuals have heterogeneous fairness preferences. Individual preferences are taken to be...

This paper studies a finite horizon version of Baron and Ferejohn's (1989) majoritarian bargaining with incomplete information. Our devised model essentially blends Spence's signaling and the coalition formation of majoritarian bargaining. The main findings include: (i) oversized coalitions may...

This study quantifies bargaining power in supply-side negotiations with incomplete information, where car dealers negotiate inventory prices with large sellers at wholesale used-car auctions. We measure an agent's bargaining power in an incomplete-information setting as the fraction of the...

While actual bargaining features many issues and decision making on the order in which issues are negotiated and resolved, the typical models of bargaining do not. Instead, they have either a single issue or many issues resolved in some fixed order, typically simultaneously. This paper shows...

In this paper we use a signaling model to analyze the effect of (endogenously-determined) third-party non-recourse loans to plaintiffs on settlement bargaining when a plaintiff has private information about the value of her suit. We show that an optimal loan (i.e., one that maximizes the joint...

Starting with a simple economic model of the value of civil litigation from each side's perspective, this paper analyses a wide range of potential litigation cost strategies, settlement offers and negotiations, together with relevant applications and insights from game theory. Specific issues...

We consider a model of litigation in which some defendants have insufficient assets to pay a judgment at trial. Because the defendant's assets are not observable, this serves as a source of asymmetric information which leads to trials in the equilibrium of the model. Unlike many other types of...