Bargaining and Conflict with Incomplete Information

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper studies bargaining and conflict under incomplete information, provides an overview and a critical account of the literature on the topic and contributes with original research. We first revise models of mechanism design and sequential bargaining that take confrontation as final. Conflict and inefficiencies are to be expected in these models whenever parties have optimistic prospects on the outcome of the all-out conflict. After examining the causes and reasons for this optimism, we move to the analysis of the recent literature that considers the existence of limited confrontations that allow bargaining to resume. In the presence of private information, these limited conflicts convey information and thus become a bargaining instrument. The paper closes with a discussion on the related empirical literature, the challenges that it faces and some potential avenues for further research.

Keywords: bargaining; conflict; incomplete information; power; optimism; Hicks paradox; uneven contenders paradox (search for similar items in EconPapers)
JEL-codes: C78 D74 D82 (search for similar items in EconPapers)
Pages: 34
Date: 2009-10
New Economics Papers: this item is included in nep-cta and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Bargaining and Conflict with Incomplete Information (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:191

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