Bargaining and the Observability of Contractual Commitment Via Third Parties

Detalhes bibliográficos
Autor(a) principal: Lang, Günther
Data de Publicação: 1999
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10362/89137
Resumo: I analyze a two-stage model of bilateral bargaining where one of the agents has the option to delegate. A first approach is to assume that the contract between the agent and his representative is perfectly observable and can be renegotiated. Commitment effects arise although renegotiation is possible. Then perfect observability of the contract is weakened to ob-serving it with certain probability. Commitment effects as pure-strategy equilibria exist if this probability is sufficiently close to one; in contrast to Bagwell's [1995] findings that imperfect observability undermines commitment. Considering the realistic case of the actual agreement between two parties being private information, the commitment value as equilibrium outcome disappears since having closed a renegotiation-proof contract offers costless self-insurance against strategic misunderstandings.
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spelling Bargaining and the Observability of Contractual Commitment Via Third PartiesBargainingRenegotiationCommitmentI analyze a two-stage model of bilateral bargaining where one of the agents has the option to delegate. A first approach is to assume that the contract between the agent and his representative is perfectly observable and can be renegotiated. Commitment effects arise although renegotiation is possible. Then perfect observability of the contract is weakened to ob-serving it with certain probability. Commitment effects as pure-strategy equilibria exist if this probability is sufficiently close to one; in contrast to Bagwell's [1995] findings that imperfect observability undermines commitment. Considering the realistic case of the actual agreement between two parties being private information, the commitment value as equilibrium outcome disappears since having closed a renegotiation-proof contract offers costless self-insurance against strategic misunderstandings.Nova SBERUNLang, Günther2019-12-03T09:29:42Z1999-011999-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10362/89137engLang, Günther, Bargaining and the Observability of Contractual Commitment Via Third Parties (January, 1999). FEUNL Working Paper Series No. 343info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-03-11T04:39:36Zoai:run.unl.pt:10362/89137Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T03:36:55.903179Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Bargaining and the Observability of Contractual Commitment Via Third Parties
title Bargaining and the Observability of Contractual Commitment Via Third Parties
spellingShingle Bargaining and the Observability of Contractual Commitment Via Third Parties
Lang, Günther
Bargaining
Renegotiation
Commitment
title_short Bargaining and the Observability of Contractual Commitment Via Third Parties
title_full Bargaining and the Observability of Contractual Commitment Via Third Parties
title_fullStr Bargaining and the Observability of Contractual Commitment Via Third Parties
title_full_unstemmed Bargaining and the Observability of Contractual Commitment Via Third Parties
title_sort Bargaining and the Observability of Contractual Commitment Via Third Parties
author Lang, Günther
author_facet Lang, Günther
author_role author
dc.contributor.none.fl_str_mv RUN
dc.contributor.author.fl_str_mv Lang, Günther
dc.subject.por.fl_str_mv Bargaining
Renegotiation
Commitment
topic Bargaining
Renegotiation
Commitment
description I analyze a two-stage model of bilateral bargaining where one of the agents has the option to delegate. A first approach is to assume that the contract between the agent and his representative is perfectly observable and can be renegotiated. Commitment effects arise although renegotiation is possible. Then perfect observability of the contract is weakened to ob-serving it with certain probability. Commitment effects as pure-strategy equilibria exist if this probability is sufficiently close to one; in contrast to Bagwell's [1995] findings that imperfect observability undermines commitment. Considering the realistic case of the actual agreement between two parties being private information, the commitment value as equilibrium outcome disappears since having closed a renegotiation-proof contract offers costless self-insurance against strategic misunderstandings.
publishDate 1999
dc.date.none.fl_str_mv 1999-01
1999-01-01T00:00:00Z
2019-12-03T09:29:42Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10362/89137
url http://hdl.handle.net/10362/89137
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Lang, Günther, Bargaining and the Observability of Contractual Commitment Via Third Parties (January, 1999). FEUNL Working Paper Series No. 343
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
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dc.publisher.none.fl_str_mv Nova SBE
publisher.none.fl_str_mv Nova SBE
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