“Negotiations with Limited Specifiability”

Abstract

This paper studies negotiations with limited specifiability —each of the participating parties may not be able to fully specify a negotiation outcome. We construct a class of negotiation protocols under which we can conduct comparative statics on specifiability as well as move structures. We find that asynchronicity of proposal announcements narrows down the equilibrium payoff set, in particular leading to a unique prediction in “common interest” negotiations. The equilibrium payoff set is not a singleton in general, and is larger under limited specifiability than under unlimited specifiability. The degree to which limitation on specifiability matters depends on fine details of the way in which such limitation is imposed