Bargaining Order in a Multi-Person Bargaining Game

Abstract

This paper studies a bargaining game with one buyer and multiple sellers of different sizes or bargaining strengths. The bargaining order is determined by the buyer. If the buyer can commit to a bargaining order, there is a unique subgame perfect equilibrium outcome where the buyer bargains in order of increasing size -- from the smallest to the largest. If the buyer cannot commit to a bargaining order and the sellers are sufficiently different, there is also a unique subgame perfect equilibrium outcome again with the order of increasing size.