Insisting on Fair Divisions in Sequential Bargaining with Asymmetric Information

We consider an alternating offer bargaining game with incomplete information, where players may be insistent on a proper subset of the set of divisions. The interpretation for this range-insistency is the fairness concern of... [ view full abstract ]

We consider an alternating offer bargaining game with incomplete information, where players may be insistent on a proper subset of the set of divisions. The interpretation for this range-insistency is the fairness concern of players, the evidence for which is from experimental findings. A range insistent commitment type player always demands a share from the range, and alwaysrejects any offer that is less than the lower bound of this range. A player, who is not insistenton any set of divisions, non-commitment type player, on the other hand, may choose to actlike a commitment type. We characterize the equilibrium set for the finite horizon model withone sided incomplete information, where the non-commitment type has the opportunity tomasquerade as a commitment type. We show that delay almost never happens and there isimmediate or almost-immediate agreement. Then, we consider the infinite horizon game andshow that Myerson (1991) result extends to range insistency, that is, the rate of players discountfactors do not affect the share they get in the equilibrium outcome. We discuss two sideduncertainty in the finite horizon game, and construct a pooling equilibrium where there is delayin agreement.