Abstract - Economics Research Reports


The Game of Negotiations: Ordering Issues and Implementing Agreements

By Lutz-Alexander Busch (Universities of Waterloo and Western Ontario) and Ignatius J. Horstmann (Universities of Western Ontario and Toronto)

May, 2000

We use a two-issue bargaining model with asymmetric information to study agent choice of how to structure bargaining. We uncover the settings in which different agenda structures are chosen in equilibrium, how the order in which issues are bargained over matters, and what impact the rules for implementing agreements have. If agreements are implemented as they are reached, "easy'' issues are negotiated first and "hard'' issues later; if agreements are implemented only after all issues are settled, then it is size that matters, with large issues settled first. All parties prefer the former rules of implementation to the latter.

JEL Classification: C7