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Cyclical delay in bargaining with externalities

Jehiel, P.; Moldovanu, B.; (1995) Cyclical delay in bargaining with externalities. Review of Economic Studies , 62 (4) pp. 619-637.

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Abstract

Externalities between buyers are shown to induce delays in negotiations between a seller and several buyers. Delays arise in a perfect and complete information setting with random matching even when there is no deadline. While with a deadline we identify delays both for positive and negative externalities, without a deadline we find that (1) when externalities are positive, there exists no SPNE in pure strategies with bounded recall that exhibits delay; (2) when externalities are negative, it may happen that all SPNE with bounded recall have the property that long periods of waiting alternate with short periods of activity: This is the cyclical delay phenomenon.

Type:Article
Title:Cyclical delay in bargaining with externalities
Publisher version:http://www3.interscience.wiley.com/journal/118510645/home
Language:English
UCL classification:UCL > School of Arts and Social Sciences > Faculty of Social and Historical Sciences > Economics

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