“A model of Bargaining with Incomplete Information” by Shmuel ZAMIR
Hebrew University of Jerusalem
Johns Hopkins University
We study the equilibrium outcomes of two-person bargaining problems in which each party has “outside option" known only to himself. We examine two game forms, a sequential-move game and a simultaneous-move game. In this context we discuss the failure to reach agreements and the loss of efficiency thereof. Invoking the analogy between the sequential-move game and the familiar ultimatum game we also provide new interpretation of the experimental evidence regarding the players’ behavior in the ultimatum game.