Gradual Bargaining in Decentralized Asset Markets  

Guillaume Rocheteau, Tai-Wei Hu, Lucie Lebeau*, Younghwan In

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

5 Citations (Scopus)
23 Downloads (Pure)


We introduce a new approach to bargaining, with strategic and axiomatic foundations, into models of decentralized asset markets. According to this approach, which
encompasses the Nash (1950) solution as a special case, bilateral negotiations follow an agenda that partitions assets into bundles to be sold sequentially. We construct two
alternating-offer games consistent with this approach and characterize their subgame perfect equilibria. We show the revenue of the asset owner is maximized when assets
are sold one infinitesimal unit at a time. In a general equilibrium model with endogenous asset holdings, gradual bargaining reduces asset misallocation and prevents
market breakdowns.
Original languageEnglish
Number of pages38
JournalReview of Economic Dynamics
Early online date15 Oct 2020
Publication statusE-pub ahead of print - 15 Oct 2020

Bibliographical note

provisional acceptance date added, based on record creation.


  • Decentralized asset markets
  • Bargaining with an agenda
  • Nash program


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