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Revealing Private Information in Bargaining
-
Gabrielle Gayer
and
Ella Segev
Published/Copyright:
December 5, 2012
Abstract
It is well known that bargaining with incomplete information incurs a substantial amount of inefficiency. We consider a bargaining procedure in which the seller makes a "take-it-or-leave-it" offer to a buyer. An initial stage in which the buyer is permitted to convey information to the seller is introduced into this framework. The decision regarding what information will be conveyed is made before the buyer knows his exact valuation. We study the type of information the buyer would be willing to transmit to the seller. The analysis determines that buyers with low valuations, in effect, reveal their valuations whereas buyers with high valuations conceal them. Communication between buyer and seller before the bargaining process begins improves both the overall efficiency of the process as well as the welfare of both buyer and seller.
Keywords: “take it or leave it” bargaining; conveying information; information structures; efficiency
Published Online: 2012-12-5
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Keywords for this article
“take it or leave it” bargaining;
conveying information;
information structures;
efficiency
Articles in the same Issue
- Advances Article
- Seller Cheap Talk in Almost Common Value Auction
- Strategic Effects of Renegotiation-Proof Contracts
- Contributions Article
- Uniquely Representing "A Preference for Uniformity"
- An Experimental Comparison of Sequential First- and Second-Price Auctions with Synergies
- Transparency, Career Concerns, and Incentives for Acquiring Expertise
- Career Concerns and Performance Reporting in Optimal Incentive Contracts
- Two Notes on the Blotto Game
- The Tennis Coach Problem: A Game-Theoretic and Experimental Study
- Multidimensional Product Differentiation with Discrete Characteristics
- Screening and Financial Contracting in the Face of Outside Competition
- On Rationalizability and Beliefs in Discrete Private-Value First-Price Auctions
- Commitment versus Flexibility in Enforcement Games
- Endogenous Preferences and Dynamic Contract Design
- Intergenerational Interactions in Human Capital Accumulation
- Behavior-Based Price Discrimination by a Patient Seller
- Altruism and Local Interaction
- Education Signaling with Uncertain Returns
- An Axiomatic Approach to Arbitration and its Application in Bargaining Games
- Consensual and Conflictual Democratization
- Topics Article
- Preference for Variety
- Information Theory and Observational Limitations in Decision Making
- Strict Concavity of the Value Function for a Family of Dynamic Accumulation Models
- A Folk Theorem for Games when Frequent Monitoring Decreases Noise
- Characterizing Welfare-egalitarian Mechanisms with Solidarity When Valuations are Private Information
- Correlation in the Multiplayer Electronic Mail Game
- Dominance Solvability of Large k-Price Auctions
- Treading a Fine Line: Characterisations and Impossibilities for Liberal Principles in Infinitely-Lived Societies
- An Axiomatization of Learning Rules when Counterfactuals are not Observed
- On a Notion of Similarity with Endowments in Public Economics
- Outsourcing and Downstream R&D under Economies of Scale
- On Communication and the Weak Sequential Core
- Asymmetric Single-peaked Preferences
- Revealing Private Information in Bargaining
