Sequential bargaining is a negotiation process where timing and strategic decision-making play crucial roles. It involves participants taking turns to make offers, with the sequence affecting power dynamics. Game theory provides a framework for analyzing these negotiations, especially in business contexts like supplier agreements or labor union talks. Mastering techniques such as first-mover advantage and understanding bargaining power are key to successful outcomes.
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Participants must carefully consider timing and learn from others' actions in sequential bargaining
Initial Proposer Advantage
The initial proposer in sequential bargaining often has an advantage in setting the stage for negotiation
Influence of Rules and Structure
The specific rules and structure of a bargaining situation can affect the power dynamics in sequential bargaining
Game theory, particularly through the use of extensive form games, is essential for analyzing sequential bargaining
In multi-round bargaining, players must consider how their immediate choices may impact future negotiation rounds
Patience and strategic proposal-making are key factors in determining the outcome of multi-round bargaining
Multi-round bargaining is common in real-world scenarios such as corporate asset sales and labor contract negotiations
Time Preferences
Time preferences can affect bargaining power in sequential bargaining
Information Asymmetry
Information asymmetry can impact bargaining power in sequential bargaining
Outside Options and Reputation
The availability of outside options and the players' reputations can also influence bargaining power
First-Mover Advantage
Negotiators can capitalize on the first-mover advantage in sequential bargaining
Strategic Foresight
Strategic foresight is crucial in guiding the negotiation process in sequential bargaining
Alternation of Roles
Alternating roles is a key principle in sequential bargaining
Examples from industrial relations and corporate mergers and acquisitions demonstrate the practical application of techniques and principles in sequential bargaining
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Definition of Sequential Bargaining
Negotiation process where participants alternate making offers and counteroffers.
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Role of Timing in Sequential Bargaining
Timing is crucial as it affects the strategic decisions and outcomes of the negotiation.
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Influence of Game Theory on Bargaining Analysis
Game theory provides a framework to understand the rules and power dynamics in bargaining scenarios.
