Bargaining

"Bargaining. As a classic example of these strategic considerations is that when agents attempt to come to an agreement despite diverging interests, information asymmetries can lead to bargaining inef- ficiencies (Myerson & Satterthwaite, 1983). Relevant uncertainties about other agents can include how much they value possible agreements, their outside options, or their beliefs about others. The essential reason for such inefficiencies is that, under uncertainty about their counterparties, agents must make a trade-off between the rewards of making more favourable demands and the risk of other agents refusing such demands"