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Multilateral Bargaining with Opt-Out Option

Maurya, Amit Kumar (2015): Multilateral Bargaining with Opt-Out Option.

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Abstract

We study a model of multilateral bargaining in which a buyer attempts to assemble objects owned by multiple sellers. Players can (non-cooperatively) opt out of the bargaining whenever they want. The presence of this option results in an equilibrium in which the buyer implements the project immediately and grabs the entire surplus. It also mitigates the inefficiency associated with nontransparent bargaining protocol. These results are in stark contrast to those obtained in Roy Chowdhury and Sengupta (2012).

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