- A-Z
- Jena Economic Resea...
- Volume 1
- Disagreement and Au...
Disagreement and Authority
- Autor(in)
- Erschienen
- 18. Juli 2007
- Nummer des Discussion-Papers
-
2007-037
- Schlagwort(e)
-
authority
bargaining
commitment
disagreement
transaction costs
- Zusammenfsg.
-
Can two negotiators fail to agree when both the size of the surplus and the rationality of the negotiators are common knowledge? We show that the answer is affirmative. When the negotiators can make irrevocable commitments at a low but positive cost, the unique symmetric equilibrium entails disagreement with high probability. In the unique pair of pure strategy equilibria, one party gets all the surplus. Even though we impose no constraints on side-payments, efficient compromises are unattainable. A strongly asymmetric authority relationship is thus the only viable alternative to costly conflict.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- article research fields JER
- economics
- JEL-Classification for JER
- C72 - Noncooperative Games ; C78 - Bargaining Theory; Matching Theory