The Negotiators Who Knew Too Much: Transaction Costs and Incomplete Information

Patrick Schmitz

No 11276, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Two parties can at some future date 2 negotiate about whether or not to collaborate in order to generate a surplus. Yet, the negotiation stage will be reached only if at date 1 both parties pay their respective transaction costs. We show that the expected total surplus may be larger when at date 1 the parties do not yet know the size of the surplus that can be generated at date 2. Moreover, joint ownership can be optimal under incomplete information even when it would be suboptimal under complete information.

Keywords: Transaction costs; Property rights; Bargaining; Incomplete information; Joint ownership (search for similar items in EconPapers)
JEL-codes: C78 D23 D86 L14 L24 (search for similar items in EconPapers)
Date: 2016-05
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: The negotiators who knew too much: Transaction costs and incomplete information (2016)
Working Paper: The Negotiators Who Knew Too Much: Transaction Costs and Incomplete Information (2016)
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