Negotiations with Limited Specifiability

Abstract

We study negotiations with limited specifiability—each party may not be able to fully specify a negotiation outcome. We construct a class of negotiation protocols to 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 negotiations with a “common interest” alternative. The equilibrium payoff set is not a singleton in general, and depends on the fine details of how limitation on specifiability is imposed. The equilibrium payoff set is weakly larger under limited specifiability than under unlimited specifiability. (JEL C72, D83, D86)