annual and cropping season environmental production conditions effects on smallholder technical efficiency in sub saharan africa evidence from ethiopia this article investigates the impact of environmental production conditions on smallholder farmers technical efficiency in ethiopia for wheat maize and sorghum farming we use a household panel data set with annual and cropping season environmental production conditions to estimate the technical efficiency scores the results show that including environmental production conditions in the stochastic frontier has a significant impact on farmers technical efficiency scores technical efficiency scores improve when environmental production conditions are incorporated in the stochastic frontier thus accounting for environmental production conditions reduces the inefficiencies that otherwise may be attributed to the characteristics of smallholder farmers

learning and wage dynamics we develop a dynamic model of learning about worker ability in a competitive labor market the model produces three testable implications regarding wage dynamics 1 although the role of schooling in the labor market s inference process declines as performance observations accumulate the estimated effect of schooling on the level of wages is independent of labor market experience 2 timeinvariant variables correlated with ability but unobserved by employers such as certain test scores are increasingly correlated with wages as experience increases and 3 wage residuals are a martingale we present evidence from the nlsy that is broadly consistent with the model s predictions

equilibrium search models and the transition from school to work this paper applies the burdett mortensen 1998 equilibrium search model to study the school to work transitions of u s high school graduates we consider the case of discrete firm heterogeneity and provide a computational method to obtain the mle our results show that unemployed blacks receive fewer offers than whites and employed blacks are more likely to lose their jobs importantly employed blacks and whites receive job offers at the same rate assigning the whites search parameters to the blacks and re solving reveals that 75 percent of the observed wage differential is explained by the job destruction rate differences

a direct mechanism characterization of sequential bargaining with one sided incomplete information we characterize the sequential equilibria of a class of infinite horizon bargaining games with one sided incomplete information when the seller the uninformed party makes all the offers we prove a folk theorem every incentive compatible individually rational direct bargaining mechanism is implementable by sequential equilibria introducing buyer counteroffers eliminates outcomes which are unfavorable to that party as the proportion of buyer offers increases the set of implementable mechanisms shrinks continuously when the proportion reaches one only the single outcome most favorable to the buyer remains thus depending on the offer structure sequentiality may or may not impose restrictions beyond static incentive compatibility

the role of strategic information transmission in a bargaining model although uncertainty about opponents valuations can result in ineffici ent outcomes in bargaining models it may not be in the private inter est of either party to reveal their valuation to the other it is sho wn that if each can send a verifiable signal which partially reveals their valuations then efficient trade is possible if optimal signal s characterized in the paper are used under two sided uncertainty both parties share in the increased joint surplus which results from this communication a mediator may be able to play a role in constru cting optimal signals copyright 1987 by royal economic society

bargaining search and outside options abstract this paper studies a two sided incomplete information bargaining model between a seller and a buyer the buyer has an outside option which is modeled as a sequential search process during which he can choose to return to bargaining at any time two cases are considered in regime i both agents have symmetric information about the search parameters we find that in contrast to bargaining with complete information the option to return to bargaining is not redundant in equilibrium however the no delay result still holds in regime ii where agents have asymmetric information about the outside option delay is possible the solution characterizes the parameters for renegotiation and those for search with no return to the bargaining table

efficient bilateral trade with statistically dependent beliefs abstract this paper derives a necessary and sufficient condition for ex post efficient trade to be feasible when trader beliefs can be statistically dependent allowing for dependent beliefs produces equilibrium and comparative statics behavior that differs qualitatively from that observed in bilateral trade models in which traders have independent beliefs

reputation in bargaining national football league contract negotiations michael conlin i introduction the notion of reputation has been used to explain everything from limit pricing to the chain store paradox to cooperation in the finitely repeated prisoners dilemma game robert wilson 1985 states that reputation can explain many behaviors perhaps too many it is too easy to suppose that there is an unobserved state variable called reputation that explains all that happens the better approach is to develop a well specified model in which the effects of reputation are delineated 27 wilson also discusses the difficulty of empirically testing the effects of reputation this difficulty has led researchers such as camerer and weigelt 1988 to perform controlled experiments designed to test these effects this article develops a wellspecified bargaining model in which reputation effects are analyzed a unique data set of national football league nfl player contracts allows me to empirically test the predictions of my model many bargaining games do not occur in isolation rather individuals often negotiate in several bargaining games sequentially for example a union representative often negotiates a sequence of contracts for different locals and a lawyer who represents a number of different clients in sequence may negotiate out of court settlements professional sports teams and professional athletes illustrate another example of sequential bargaining sports teams negotiate with a number of players sequentially in an effort to reach contractual agreements this article addresses the issue of reputation effects in a sequence of bargaining games reputation effects refer to an individual s actions in a bargaining game providing some information about the individual which influences his actions and his opponents beliefs about those actions in subsequent bargaining games in this manner the outcome of a bargaining game has predictive powers on the outcome of subsequent bargaining games this article presents a model in which a buyer faces a sequence of two bargaining games with different sellers the model addresses how reputation effects influence sequential bargaining games by having the buyer s valuation be positively correlated across bargaining games each bargaining game is structured as a war of attrition game where both the buyer and seller can either make a conceding offer continue negotiating or terminate negotiations at any time there are costs per unit time incurred by the buyer and seller during negotiations and their surpluses are discounted after a certain time a unique sequential equilibrium outcome is calculated from which well defined comparative static results are obtained the model is applied to nfl contract negotiations where the team is the buyer who negotiates with different players sequentially the surpluses of the buyer and seller are discounted after the start of training camp based on the commonly held belief that a player s expected performance is adversely affected by missing the start of training camp conlin 1999 finds empirical support for this belief 1 the comparative static results are empirically tested using rookie contract data of players selected in the 1986 through 1991 nfl drafts these empirical results suggest that an nfl team s contract negotiations are affected by the terms agreed to in prior contract negotiations with different players and when these terms were agreed upon the article is organized in the following manner section ii presents a brief literature review on reputation and bargaining and discusses this study s contribution section iii describes a model of two bargaining games where a single buyer negotiates with different sellers sequentially section iv discusses the nfl draft the contract negotiation process for those players drafted and nfl rookie contracts section v relates the model to nfl rookie contract negotiations section vi summarizes the nfl contract data and section vii describes empirical tests of the model s comparative static results

bargaining and reputation an experiment on bargaining in the presence of behavioural types we conduct a series of laboratory experiments to understand what role commitment and reputation play in bargaining the experiments implement the abreu and gul 2000 bargaining model that demonstrates how introducing behavioral types which are obstinate in their demands creates incentives for all players to build reputations for being hard bargainers the data are qualitatively consistent with the theory as subjects mimic induced types furthermore we find evidence for the presence of complementary types whose initial demands acquiesce to induced behavioural demands however there are quantitative deviations from the theory subjects make aggressive demands too often and participate in longer conflicts before reaching agreements overall the results suggest that the abreu and gul 2000 model can be used to gain insights to bargaining behavior particularly in environments where the process underlying obstinate play is well established

investments holdup and the form of market contracts the authors analyze incomplete contracts to induce efficient investment with exogenous switching costs fixed price contracts are efficient generate some rigidity in prices are renegotiated intermittently by possibly small amounts and when inflation is positive generate asymmetric responses to shocks all consistent with evidence on prices and wages with two sided specific investments efficiency requires prices to have sufficient escalator clauses to avoid renegotiation as observed in many long term contracts a third case with one sided specific investments can generate take or pay contracts and explain why firms sometimes pay for specific investments that appear to benefit employees directly

credible threats in a wage bargaining model with on the job search abstract this note shows that in standard equilibrium search models with strategic wage bargaining and on the job search renegotiation does not require mutual consent if the worker needs a credible threat to trigger renegotiation wages are renegotiated less frequently than in the original model

bargaining with two sided incomplete information an infinite horizon model with alternating offers this paper examines an infinite horizon bargaining model incorporating five features two sided incomplete information with potentially information revealing strategies an infinite horizon uncertainty concerning the potential gains from trade an illumination of interesting qualitative bargaining issues and plausible free from arbitrarily specified out of equilibrium conjectures equilibria these features motivated in the paper have powerful implications a nash equilibrium exists and is generically both unique and sequential comparative static implications of variations in the game s specifications are developed we find that natural indications of bargaining strength emerge from the model and establish the intuitive result that an increase in a player s relative bargaining strength makes that player more likely to capture the gains from bargaining

bargaining with arrival of new traders we study dynamic bargaining with asymmetric information and arrival of exogenous events which represent arrival of traders or information we char acterize the unique limit of stationary equilibria with frequent offers the possi bility of arrivals changes equilibrium dynamics there is delay in equilibrium and the seller slowly screens out buyers with higher valuations the seller pay off equals what he can achieve by simply awaiting an arrival in applications when buyer valuations fall average prices drop and delay increases surplus division depends on relative arrival rates of buyers sellers and expected time to trade is a nonmonotonic function of the arrival rate

do wages rise with job seniority a reassessment the authors provide new estimates of the return to job seniority using a dataset similar to that employed in joseph altonji and robert shakotko do wages rise with job seniority review of economic studies 1987 and robert topel specific capital mobility and wages journal of political economy 1991 they consider the strengths and weaknesses of these studies treatment of economy wide trends their dating conventions for tenure and wages their handling of wage observations that might span multiple jobs and their estimation approaches re estimation points to an effect often years of tenure on the log wage equal to 11 which is above the preferred estimate of altonji and shakotko but far below that of topel changes in earnings distributions and in the employment relationship motivate the examination of more recent data perhaps surprisingly the return to tenure has probably increased over time

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

a non cooperative bargaining theory with incomplete information verifiable types abstract we consider a non cooperative sequential bargaining game with incomplete information where two players negotiate for mechanisms with ex post verifiable types at the interim stage we prove the existence of a stationary sequential equilibrium of the bargaining game where the ex post nash bargaining solution with no delay is asymptotically implemented with probability one further the ex post nash bargaining solution is a unique outcome of a stationary equilibrium under the property of independence of irrelevant types iit whereby the response of every type of a player is independent of allocations proposed to his other types and under a self selection property of their belief

on measuring aggregate social efficiency abstract cross country comparisons of social indicators controlling for income and or social spending have been widely used to measure and explain social efficiency analogously to technical efficiency in production the article argues that these methods are clouded in ambiguities about what is being measured standard methods of measuring technical efficiency require assumptions that are unlikely to hold for social indicators in the context of a simple parametric model of life expectancy conditions are identified under which there will be a systematic pattern of bias in estimates of efficient public health spending

bargaining and reputation the paper develops a reputation based theory of bargaining the idea is to investigate and highlight the influence of bargaining postures on bargaining outcomes a complete information bargaining model a la rubinstein is amended to accommodate irrational types who are obstinate and indeed for tractability assumed to be completely inflexible in their offers and demands a strong independence of procedures result is derived after initial postures have been adopted the bargaining outcome is independent of the fine details of the bargaining protocol so long as both players have the opportunity to make offers frequently the latter analysis yields a unique continuous time limit with a war of attrition structure in the continuous time game equilibrium is unique and entails delay consequently inefficiency the equilibrium outcome reflects the combined influence of the rates of time preference of the players and the ex ante probabilities of different irrational types as the probability of irrationality goes to zero delay and inefficiency disappear furthermore if there is a rich set of types for both agents the limit equilibrium payoffs are inversely proportional to their rates of time preference

reputational bargaining with minimal knowledge of rationality two players announce bargaining postures to which they may become committed and then bargain over the division of a surplus the share of the surplus that a player can guarantee herself under first order knowledge of rationality is determined as a function of her probability of becoming committed as is the bargaining posture that she must announce in order to guarantee herself this much this maxmin share of the surplus is large relative to the probability of becoming committed e g it equals 30 if the commitment probability is 1 in 10 and equals 13 if the commitment probability is 1 in 1000 and the corresponding bargaining posture simply demands this share plus compensation for any delay in reaching agreement

endogeneity of alternating offers in a bargaining game we investigate an infinite horizon two person simultaneous move bargaining game with incomplete information and discounted payoffs the game takes the form of a concession game in each period each player chooses to give in or hold out the game continues until at least one of the players chooses to give in at which point agreement has been reached and the game terminates for any discount factor if the players priors about each other s type are sufficiently asymmetric there is a unique nash equilibrium in which the two players alternate in their willingness to give in

uncertainty about uncertainty and delay in bargaining we study a one sided offers bargaining game in which the buyer has private information about the value of the object and the seller has private information about his beliefs about the buyer s valuation we show that this uncertainty about uncertainties dramatically changes the set of outcomes in particular second order beliefs can lead to a delay in reaching agreement even when the seller makes frequent offers we show that not all types of second order beliefs lead to a delay when the buyer assigns positive probability to the seller knowing the buyer s value then delay not only can occur but it must occur for a class of equilibria however in all other cases delay will never occur

breakdown in multilateral negotiations abstract we analyze a complete information multilateral bargaining model in which a buyer is to purchase two complementary goods from two sellers binding cash offer contracts are used to govern transactions in contrast to preexisting literature we do not normalize the parties reservation utilities to zero we show that this assumption holds critical importance by demonstrating that a complete breakdown of negotiations may occur as the unique equilibrium outcome even if only two sellers are present

strategic delay in bargaining with two sided uncertainty the role of strategic delay is analyzed in an infinite horizon alternating offer model of bargaining a buyer and seller are engaged in the trade of a single object both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly an equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer a bargainer expecting large gains from trade is more impatient than one expecting small gains and hence makes concessions earlier on trade occurs whever gains from trade exist but due to the private information only after costly delay panmunjom korea upi the american general and the north korean general glared at each other across the table and the only sound was the wind howling across the barren hills outside their hut maj gen james b knapp negotiator for the united nations command unc was waiting for maj gen ri choonsun of the democratic people s republic of north korea to propose a recess they sat there arms folded for 42 hours not a word finally gen ri got up walked out and drove away evening bulletin philadelphia 11 april 1969

dynamic bargaining with transaction costs a buyer and seller alternate making offers until an offer is accepted or someone terminates negotiations the seller s valuation is common knowledge but the buyer s valuation is known only by the buyer impatience to reach an agreement comes from two sources the traders discount future payoffs and there are transaction costs of bargaining equilibrium behavior involves either immediate trade delayed trade or immediate termination depending on the size of the gains from trade and the relative bargaining costs this contrasts with the pure discounting model where termination never occurs and the pure transaction cost model where delayed trade never occurs

job search bargaining and wage dynamics this article constructs and estimates a model of wage bargaining with on the job search to explore three different components of wages general human capital match specific capital and outside options as the workers find better job opportunities the current employer has to compete with outside firms to retain them this between firm competition results in wage growth even when productivity remains the same the model is estimated by a simulated minimum distance estimator and data from the 1979 national longitudinal study of youth the results indicate that the improved value of the outside option raises wages by 14 16 in the first 5 years

bargaining with incomplete information an infinite horizon model with two sided uncertainty the resolution of any bargaining conflict depends crucially on the relative urgency of the agents to reach agreement and the information each agent has about the others preferences this paper explores within the context of an infinite horizon bargaining model with two sided uncertainty how timing and information affect the rational behaviour of agents when commitment is not possible since the bargainers are uncertain about whether trade is desirable they must communicate some of their private information before an agreement can be reached this need for learning due to incomplete information about preferences results in bargaining inefficiencies trade often occurs after costly delay thus the model provides an explanation for the inefficient bargaining behaviour that appears to occur often in practice

bargaining under incomplete information this paper presents and analyzes a bargaining model of bilateral monopoly under uncertainty under the bargaining rule proposed the buyer and the seller each submit sealed offers that determine whether the good in question is sold and the transfer price the nash equilibrium solution of this bargaining game implies an offer strategy of each party that is monotonic in its own reservation price and depends on its assessment of the opponent s reservation price issues of relative bargaining advantage and efficiency are examined for a number of special cases finally we discuss the appropriateness of the nash solution concept

bargaining and search with recall a two period model with complete information two standard results of previous bargaining models state that delay is generally not expected to occur under complete information and bargaining outcome depends crucially on the bargainers intrinsic characteristics that determine their reservation prices and in general bargainers with better reservation prices tend to get better outcomes this paper considers a bilateral bargaining problem with complete information in which one of the bargainers the buyer is allowed to search while bargaining more importantly we assume that the buyer is allowed to recall past outside offers we find that quite contrary to the standard results of previous complete information bargaining models complete information renders no guarantee for immediate resolution of bargaining and the effect of changing the buyer s search cost on each player s bargaining outcome is unpredictable the major driving force of these two results is the assumption that the buyer can recall past outside offers

a theory of wage dynamics a dynamic equilibrium model of long term implicit labour contracts under incomplete but symmetric information is developed workers are assumed to be risk averse and of unknown ability or productivity risk neutral firms learn as do workers about each worker s productivity by observing the worker s output over time it is shown that equilibrium contracts provide for wages which never decline with age and increase only when the worker s market value increases above his current wage in addition to characterizing the equilibrium wage contract we also derive some of its implications for the behaviour of aggregate wages across various groups of workers these implications explain some findings in the recent empirical literature on ageearnings profiles in particular our model can explain why earnings may be positively related to experience even after controlling for productivity as some empirical studies have indicated

wage growth due to human capital accumulation and job search a comparison between the united states and germany this paper compares the sources of wage growth of young male workers in two countries with very different labor market institutions the united states and germany the author first develops a simple method for decomposing wage growth into components due to general human capital accumulation firm specific human capital accumulation and job search the empirical analysis uses data from administrative records germany and the national longitudinal survey of youth united states for cohorts entering the labor market in the late 1970s and early 1980s although the two countries differed substantially in mobility rates they were similar in the sources of wage growth with general human capital accumulation being the most important single source and job search accounting for an additional 25 or more of total wage growth there is no evidence that returns to firm specific human capital accumulation were higher for german apprentices than for u s high school dropouts or graduates

alternating offer bargaining with two sided incomplete information i study alternating offer bargaining games with two sided incomplete information about the players discount rates for both perfect bayesian equilibrium and a rationalizability style notion i characterize the set of expected payoffs which may arise in the game i also construct bounds on agreements that may be made the set of expected payoffs is easy to compute and incorporate into applied models my main result is a full characterization of the set of perfect bayesian equilibrium payoffs for games in which the distribution over the players discount rates is of wide support yet is in a weak sense close to a point mass distribution i prove a lopsided convergence result each player cannot gain from a slight chance that she is a strong type but the player can suffer greatly if there is a slight chance that she is a weak type

gambling reputation repeated bargaining with outside options we study the role of incomplete information and outside options in determining bargaining postures and surplus division in repeated bargaining between a long run player and a sequence of short run players the outside option is not only a disagreement point but reveals information privately held by the long run player in equilibrium the uninformed short run players offers do not always respond to changes in reputation and the informed long run player s payoffs are discontinuous the long run player invokes inefficient random outside options repeatedly to build reputation to a level where the subsequent short run players succumb to his extraction of a larger payoff but he also runs the risk of losing reputation and relinquishing bargaining power we investigate equilibrium properties when the discount factor goes to 1 and when the informativeness of outside options diffuses in both cases bargaining outcomes become more inefficient and the limit reputation building probabilities are interior publication abstract

predicting technical effciency in stochastic production frontier models in the presence of misspecification a monte carlo analysis this paper provides a theoretical explanation for the sensitivity of technical efficiency measures to the choice of functional specification in stochastic production frontier models it is shown that inappropriate functional specifications translate into a misspecification in the conditional mean of the stochastic frontier regression model this misspecification in turn results in estimates of technical efficiency confidence intervals and production elasticities being biased even asymptotically monte carlo simulations reveal that the severity of the bias depends on the functional specification and the percentage contribution of the variance of technical inefficiency to the total variance of the composed errors

bargaining and reputation in search markets in a two sided search market agents are paired to bargain over a unit surplus the matching market serves as an endogenous outside option for a bargaining agent behavioral agents are commitment types that demand a constant portion of the surplus the frequency of behavioral types is determined in equilibrium even if the frequency of behavioral types is negligible they aect the terms of trade and eciency in an unbalanced market where the entering

empirical age earnings profiles the human capital earnings function in which earnings are expressed as a quadratic in potential experience is probably the most widely accepted empirical specification in economics in spite of its widespread acceptance the human capital earnings function provides a very poor approximation of the true empirical relationship between earnings and experience the standard formulation understates early career earnings growth by about 30 50 and overstates midcareer growth by 20 50 however simple alternative specifications that fit the data are available

bilateral trading and incomplete information price convergence in a small market abstract we study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value in addition to this seller with private information there are two identical buyers and another seller whose valuation is commonly known to be in between the two possible valuations of the seller with private information we consider an infinite horizon game with simultaneous one sided offers and simultaneous responses we construct one particular pbe of the game and show that as the discount factor goes to 1 prices in all transactions converge to the same value we then show that this is the case with any stationary equilibrium of the game that is the asymptotic outcome is unique across all stationary equilibria

a bargaining model with incomplete information about time preferences etude d un jeu de negociation strategique sequentiel avec information incomplete caracterisation d une classe d equilibres sequentiels appeles equilibres sequentiels de negociation et demonstration de l unicite de cet equilibre

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

efficiency technological change and output growth in greek olive growing farms a box cox approach this paper captures the relative contributions of input growth technological change and technical efficiency to olive oil production growth for a panel data set of 125 greek olive growing farms for the period 1987 to 1993 a flexible generalized quadratic box cox functional form is proposed to represent the underlying production technology this functional specification copes with the problem of zero inputs and nests all widely used production frontiers empirical results show that the observed production growth is mainly due to increased input use since it was not accompanied by rapid introduction of technological innovations and improvements in efficiency levels

frontier estimation and firm specific inefficiency measures in the presence of heteroscedasticity the purpose of this article is to illustrate a straightforward and useful method for addressing the problem of heteroscedasticity in the estimation of frontiers a heteroscedastic cost frontier model is developed and estimated using bank cost data similar to that used by ferrier and lovell our results show dramatic changes in the estimated cost frontier and in the inefficiency measures when accounting for heteroscedasticity in the estimation process we find that the rankings of firms by their inefficiency measures is affected markedly by the correction for heteroscedasticity but not by alternative distributional assumptions about the one sided error term

uncertainty and delay in bargaining this paper investigates the relationship between uncertainty and delay of agreement in the one sided offer bargaining model with two sided uncertainty where the seller makes offers we construct a weak stationary equilibrium in which different types of the seller charge different prices in every period we completely characterize the separating equilibrium by three regularity conditions and show that the time interval between offers converges to zero the seller s initial price offer in a separating equilibrium converges with probability 1 to the lowest valuation of the buyer if and only if the gain from trading is common knowledge we have witnessed a proliferation of sequential bargaining models that with a few remarkable exceptions fudenberg and tirole 1983 cramton 1984 and chatterjee and samuelson 1987 are based on models with one sided uncertainty the importance of studying bargaining models with one sided uncertainty is that despite their highly special informational structure we can derive valuable insights into the role of uncertainty in the delay in reaching an agreement while keeping the computational exercise tractable however the assumption of one sided uncertainty essentially excludes the situation where the buyer s actual reservation value is lower than the seller s actual reservation value though they are still engaged in the bargaining process the primary objective of this paper is to investigate the role of uncertainty about the gain from trading in a sequential bargaining model with two sided incomplete information in the models with one sided incomplete information important studies fudenberg levine and tirole 1985 and gul sonnenschein and wilson 1986 are often based on weak stationary equilibria where the equilibrium strategy of each player only depends upon the posterior conjecture about the other player and the previous period s offer although the importance of two sided uncertainty and the weak stationary equilibrium is well recognized previous research on sequential bargaining models has not combined the two features within the same framework studies on the models under two sided uncertainty have not focused on weak stationary equilibria for example cramton 1984 computes a specific sequential equilibrium with interesting properties in which the equilibrium strategies of both players depend upon histories in a rather complex fashion on the other hand it is only in models under one sided uncertainty that the weak stationary equilibrium has been extensively studied this paper computes and analyzes the weak stationary equilibria in a model under two sided uncertainty in order to investigate the effect of uncertainty on the delay in agreement we will extend the results from previous studies of one sided uncertainty models the computation of the equilibrium in models with two sided uncertainty is generally very complicated furthermore we must identify a sensible outcome if more than one equilibrium exists in the model to simplify the analysis we choose a standard bargaining

evolutionary stability in a reputational model of bargaining a large and growing literature on reputation in games builds on the insight that the possibility of one or more players being boundedly rational can have significant effects on equilibrium behavior this literature leaves unexplained the presence of behavioral players in the first place as well as the particular forms of irrationality assumed and the population shares of the various types in this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior this cost may be arbitrarily small within the context of a reputational model of bargaining we show that evolutionary stability necessitates the presence of behavioral players it also places significant joint restrictions on the set of behavioral types that can coexist their respective population shares and the long run population share of rational players

an equilibrium model of health insurance provision and wage determination we investigate the effect of employer provided health insurance on job mobility rates and economic welfare using a search matching and bargaining framework in our model health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee the resulting equilibrium is one in which not all employment matches are covered by health insurance wages at jobs providing health insurance are larger in a stochastic sense than those at jobs without health insurance and workers at jobs with health insurance are less likely to leave those jobs even after conditioning on the wage rate we estimate the model using the 1996 panel of the survey of income and program participation and find that the employer provided health insurance system does not lead to any serious inefficiencies in mobility decisions

strategic voting over strategic proposals prior research on strategic voting has reached the conclusion that unanimity rule is uniquely bad it results in destruction of information and hence makes voters worse off we show that this conclusion depends critically on the assumption that the issue being voted on is exogenous that is independent of the voting rule used we depart from the existing literature by endogenizing the proposal that is put to a vote and establish that under many circumstances unanimity rule makes voters better off moreover in some cases unanimity rule also makes the proposer better off even when he has diametrically opposing preferences in this case unanimity is the pareto dominant voting rule voters prefer unanimity rule because it induces the proposing individual to make a more attractive proposal the proposing individual prefers unanimity rule because the acceptance probabilities for moderate proposals are higher we apply our results to jury trials and debt restructuring

estimation of a doubly heteroscedastic stochastic frontier cost function this article extends the results obtained by caudill ford and cropper in estimating and testing stochastic frontier cost functions in the presence of heteroscedastic inefficiency using cross section data it suggests the estimation of the model under the assumption of heteroscedasticity in both random terms this avoids any possible misspecification bias and the use of incorrect tests the same data as used by caudill et al supports the new specification moreover we find that firm specific inefficiency measures are extremely sensitive to the proposed correction for heteroscedasticity

estimating technical efficiency of australian dairy farms using alternative frontier methodologies technical efficiency is estimated and examined for a cross section of australian dairy farms using various frontier methodologies bayesian and classical stochastic frontiers and data envelopment analysis the results indicate technical inefficiency is present in the sample data also identified are statistical differences between the point estimates of technical efficiency generated by the various methodologies however the rank of farm level technical efficiency is statistically invariant to the estimation technique employed finally when confidence credible intervals of technical efficiency are compared significant overlap is found for many of the farms intervals for all frontier methods employed the results indicate that the choice of estimation methodology may matter but the explanatory power of all frontier methods is significantly weaker when interval estimate of technical efficiency is examined

identification of search models using record statistics this paper shows how record value theory a branch of statistics that deals with the timing and magnitude of extreme values in sequences of random variables can be used to recover features of the wage offer distribution in conventional search models using national longitudinal survey of youth nlsy wage data i show that the data are not compatible with specifications for the offer distribution characterized by extreme negative skewness in addition i show that my approach can be used to construct a bound on the returns to job seniority my results suggest that job seniority plays only a minor role in the wage growth of the workers surveyed in the nlsy copyright 2008 wiley blackwell

sharing the wealth when should firms treat customers as partners marketers often stress the importance of treating customers as partners a fundamental premise of this perspective is that all parties can be weakly better off if they work together to increase joint surplus and reach pareto efficient agreements for marketing managers this implies organizing marketing activities in a manner that maximizes total surplus this logic is theoretically sound when agreements between partners are limitless and costless in most consumer marketing contexts business to consumer this is typically not true the question i ask is should one still expect firms to partner with consumers and reach pareto efficient agreements in this paper i use the example of a firm s choice of product configuration to demonstrate two effects first i show that a firm may configure a product in a manner that reduces total surplus but increases firm profits second one might conjecture that increased competition would eliminate this effect but i show that in a duopoly firm profits may be increasing in the cost of product completion this second result suggests that firms may prefer to remain inefficient and or stifie innovations both results violate a fundamental premise of partnering that firms and consumers should work together to increase total surplus and reach pareto efficient agreements the model illustrates that pareto efficient agreements are less likely to occur if negotiation with individual partners is infeasible or costly such as in business to consumer contexts consumer marketers in one to many marketing environments should be wary of treating customers as partners because pareto efficient agreements may not be optimal for their firm

a theory of trade concessions abstract we present a model of tariff disputes and concessions consisting of an infinitely repeated game under bilateral incomplete information given potential agreements to be reached through unilateral or reciprocal concessions we find that an agreement involving reciprocal concessions is reached immediately if the discount factor is large and or the volume of trade is small otherwise prior beliefs about country type matter when both countries hold pessimistic priors immediate reciprocal concessions still occur very different prior beliefs lead to an immediate unilateral concession of the pessimistic country whereas optimistic priors coupled with low discount factors may generate delayed agreements 1997 elsevier science b v all rights reserved

a multistage model of bargaining this paper presents a simple multistage model of bargaining wherein a seller makes an offer that can be either accepted or refused if rejected the process continues how the seller s ability to make commitments affects bargaining outcomes is analysed by comparing the commitment equilibria to those arising when commitment is impossible the effects of increasing uncertainty about preferences and varying the length of the bargaining horizon are analysed the ways in which the bargaining environment can be changed to improve outcomes are discussed

sequential bargaining with incomplete information this paper describes a simple two person two period bargaining game and solves it using the concept of perfect bayesian equilibrium in which the actions of each player convey information which is used by his opponent the paper examines the effects of changes in bargaining costs the size of the contract zone and the length of the bargaining process on such aspects of the solution as the probability of impasse and the likelihood of concessions the combination of information transfer and the lack of pre commitment embodied in perfectness yields many surprising results common perceptions about the effects of parameter changes on bargaining processes are suspect and should be checked in the particular game being discussed