Bargaining under two-sided incomplete information: the unrestricted offers case

The authors recently examined a noncooperative game-theoretic bargaining model with two-sided incomplete information and an infinite horizon. This paper examines the model without restrictions. By doing so, we will gain some insight into whether these results are robust, in the sense that they do not depend upon the special structure of the model, and hence, might provide useful theoretical foundations for applied work. We find that the basic results generalize. As with the restricted model, we find an equilibrium in which bargaining will proceed for a finite but endogeneously determined number of stages. A terminal condition on the equilibrium sequence of agents' beliefs determines the properties of the equilibrium and allows comparative static results to be obtained.