Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145772
Authors: 
Schumacher, Heiner
Karle, Heiko
Volund, Rune
Year of Publication: 
2016
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Bargaining and Participation Constraints B04-V1
Abstract: 
We analyze how early settlement offers affect Nash bargaining outcomes when agents are asymmetrically informed about the distribution of bargaining powers and exhibit expectations-based loss-aversion preferences. Before the start of the bargaining process, the sender has private information about the receiver’s bargaining power. His settlement offers may convey this private information so that they change the receiver’s expectations and, by loss aversion, preferences. We show that the sender can exploit this mechanism by making non-binding settlement offers, i.e., the receiver is free to accept them at any time, even after learning her true bargaining value.
JEL: 
C78
D03
K12
Document Type: 
Conference Paper

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