Public vs. Private Offers in the Market for Lemons
Johannes Hörner, Nicolas Vieille
Econometrica · 2009 · Volume 77 · Issue 1
Abstract
We study the role of observability in bargaining with correlated values. Short-run buyers sequentially submit offers to one seller. When previous offers are observable, bargaining is likely to end up in an impasse. In contrast, when offers are hidden, agreement is always reached, although with delay.
Keywords
Bargaining, delay, impasse, observability, lemons problem
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