Bilateral matching and bargaining with private information (Q2268125)

This paper studies equilibria of a dynamic matching and bargaining game with two-sided private information of bilateral bargaining. There are two kinds of frictions, namely time discounting and explicit search costs. A necessary and sufficient condition on parameters for existence of a nontrivial equilibrium is obtained. This condition is the same regardless whether the information is private or not. In addition, it is shown that when the discount rate is sufficiently small, the equilibrium is unique and has the property that every meeting results in trade.