Public vs. Private Offers in the Market for Lemons

Nicolas Vieille (1) , Johannes Hörner (1)

1 GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC

We study the role of observability in bargaining with correlated values. Short-run buyers sequentially submit offers to one seller. When previous offers are observable, bargaining is likely to end up in an impasse. In contrast, when offers are hidden, agreement is always reached, although with delay.

Keywords: Public offer; Private offer; lemons; market

Domains: Humanities and Social Sciences; Economics and Finance; Economy and decision science

Nicolas Vieille, Johannes Hörner. Public vs. Private Offers in the Market for Lemons. Econometrica, 2009, Vol.77,n°1, pp.29-69. ⟨hal-00464577⟩