Relative concerns and delays in bargaining with private information

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Working paper
Ana Mauleon and Vincent Vannetelbosch
Issue number: 
Université catholique de Louvain
We consider Rubinstein's two-person alternating-offer bargaining model with two-sided incomplete information. We investigate the effects of one party having relative concerns on the bargaining outcome and the delay in reaching an agreement. We find that facing an opponent having stronger relative concerns only hurts the bargainer when she is stronger than her opponent. In addition, we show that an increase of one party's relative concerns will decrease the maximum delay in reaching an agreement.
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