Template-Type: ReDIF-Paper 1.0
Title: Commitment through Incomplete Information in a Simple Repeated Bargaining Model
Author-Name: Klaus M. Schmidt
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Keywords: Bargaining, Commitment, Repeated Games, Reputation
Abstract: The paper analyzes a finitely repeated bargaining game with asymmetric 
 information. It gives a precise characterization of the equilibrium path 
 and the equilibrium payoffs of all sequential equilibria satisfying a weak 
 Markov property. The method used allows for arbitrarily many different types 
 and provides an intuitive understanding of how "reputation" works. It is 
 shown that the seller can use the incomplete information about his costs to 
 credibly threaten never to accept a price lower than his highest possible 
 costs before the very end of the game. This result is independent of the 
 discount factors of the two players.
Series: Sonderforschungsbereich 303, University of Bonn, Germany
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Creation-Date: 1990-07
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Handle: RePEc:bon:bonsfa:303