Browsing by Subject "Sequential bargaining"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Item
    Price experimentation in confidential negotiations
    (2021-05-07) Lee, Jangwoo; Fuchs, William, 1977-; Almazan, Andres; Alti, Aydogan; Titman, Sheridan; Wiseman, Thomas
    I develop a model in which a long-lived seller concurrently negotiates with multiple long-lived buyers over two periods. Within this framework, I consider two protocols: a public negotiation process and a confidential negotiation process. In the confidential negotiation process, buyers competitively engage in “price experimentation”: they sacrifice part of initial profits so that they can enjoy informational advantages over competitors later. Due to this channel, the seller benefits from (1) maintaining confidentiality over past offers and (2) reducing the number of buyers in the confidential negotiation process, even without any entry cost.