Information and evidence in bargaining

Péter Eső () and Chris Wallace
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Péter Eső: University of Oxford

Economic Theory Bulletin, 2014, vol. 2, issue 1, No 3, 23-32

Abstract: Abstract In a simple bilateral bargaining model with two-sided private information, players may receive signals about the value of the available surplus. The equilibrium of this game when signals are unverifiable information is qualitatively different from when they constitute verifiable evidence: in the latter case some proposer types will always separate, whereas in the former no information is ever transmitted. Despite the presence of “unraveling”, the proposer is always better off with verifiable evidence, although efficiency may be adversely affected. Interpreting the ability to generate verifiable evidence as bargaining skill, a player benefits from being more skilful and may also be better off with a more skilful rival.

Keywords: Bargaining; Two-sided private information; Unverifiable information; Verifiable evidence (search for similar items in EconPapers)
JEL-codes: C78 D82 D83 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s40505-013-0023-3

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