Sequencing bilateral negotiations with externalities
Abstract:
We study the optimal sequence of bilateral negotiations between one principal and two agents, whereby the agents have different bargaining power. The principal chooses whether to negotiate first with the stronger or the weaker agent. We show that the joint surplus is highest when the principal negotiates with the stronger agent first, independent of externalities between agents being positive or negative. The sequence chosen by the principal maximizes the joint surplus if there are negative externalities. Instead, if externalities are positive, the principal often prefers to negotiate with the weaker agent first. We also demonstrate that the sequence can be non-monotonic in the externalities and provide conditions for simultaneous timing to be optimal.
Date: 16 January 2018, 16:30 (Tuesday, 1st week, Hilary 2018)
Venue: Nuffield College, New Road OX1 1NF
Venue Details: Conference Room
Speaker: Markus Reisinger (Frankfurt School of Finance and Management)
Organising department: Department of Economics
Part of: Learning, Games and Network Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Erin Saunders, Anne Pouliquen