Abstract
When an economic exchange requires agreement
by multiple independent parties, the potential exists for an individual
to strategically delay agreement in an attempt to capture a greater share
of the total surplus created by the exchange. This holdout problem, as
it has been called, is a common feature of the land assembly literature
because land development and urban renewal frequently requires the assembly
of multiple parcels of land. Using a multiple-round ultimatum bargaining
game, this paper examines the theoretical and behavioral impact of information
and the bargaining institution on holdout, efficiency, and the distribution
of the gains from trade. All treatments involve one buyer, two sellers,
and complementary exchanges. We compare treatments that involve public
information about buyer values and sellers costs to treatments in which
values and costs are private information. We also compare treatments with
repeated, one-sided take-it-or-leave offers to treatments with alternating-offer
bargaining and Nash bargaining.