Opacity in Bargaining over Public Good Provision

Julian Lamprecht and Marcel Thum

No 9871, CESifo Working Paper Series from CESifo

Abstract: We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents, whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will, however, fall short of the socially desirable level. Compared to unilateral delegation, bilateral delegation is never worse from a welfare perspective.

Keywords: public good provision; transparency; opacity; bargaining; incomplete information; delegation (search for similar items in EconPapers)
JEL-codes: C78 H40 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-gth and nep-mic
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Journal Article: Opacity in bargaining over public good provision (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9871

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