On Some Connections between Negotiating while Fighting and Bargaining between a Buyer and Seller

Abstract

We point out an equivalence between a class of games in which players negotiate while fighting and a class of games in which a buyer and seller negotiate over terms. Importantly and perhaps ironically, bargaining before fighting is strategically distinct from bargaining before a change of ownership but bargaining while fighting is equivalent to bargaining before a change of ownership. These connections and intuition from models of bilateral trade help shed light on two mechanisms for learning while frighting: inference based on observing strategic choices and information leakage on the battlefield. Debates on the relative importance of these to mechanism are addressed; some subtle clarifications to extant arguments are provided. Moreover, the importance of learning hard information from the battlefield is connected to work on Coasian Dynamics with information leakage and avenuse for future work relying on advances in behavioral theory are sketched out.