The prevalence of take-it-or-leave-it offers

B-Tier
Journal: Games and Economic Behavior
Year: 2025
Volume: 151
Issue: C
Pages: 42-58

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study the effect of the option to exit in finite-horizon, two-person bargaining where players make offers alternatingly and incur fixed costs per period. We show that players use take-it-or-leave-it strategies in the unique equilibrium when there is no discounting. Expecting a low payoff at the next period as a respondent, a proposer would choose to exit after her demand were rejected. This causes her opponent to accept her take-it-or-leave-it offer. This prediction is generically valid even when the division at the final period is exogenously given, and is conditionally true when the cost of bargaining includes discounting.

Technical Details

RePEc Handle
repec:eee:gamebe:v:151:y:2025:i:c:p:42-58
Journal Field
Theory
Author Count
1
Added to Database
2026-01-25