Payoff uncertainty, bargaining power, and the strategic sequencing of bilateral negotiations

Journal Article

This article investigates the sequencing choice of a buyer who negotiates with the sellers of two complementary objects with uncertain payoffs. The possibility of inefficient trade may generate strict sequencing preference. The buyer begins with the weaker seller if the sellers have diverse bargaining powers and with the stronger one if both sellers are strong bargainers. This sequencing is likely to increase the social surplus. Moreover, the buyer may find it optimal to raise her own acquisition cost by committing to a minimum purchase price or outsourcing. The first- and second-mover advantages for the sellers are also identified. © 2012, RAND.

Full Text

Duke Authors

Cited Authors

  • Krasteva, S; Yildirim, H

Published Date

  • 2012

Published In

Volume / Issue

  • 43 / 3

Start / End Page

  • 514 - 536

International Standard Serial Number (ISSN)

  • 0741-6261

Digital Object Identifier (DOI)

  • 10.1111/j.1756-2171.2012.00184.x