A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices

Steven Brams (), Todd Kaplan and D. Marc Kilgour ()
Additional contact information
D. Marc Kilgour: Department of Mathematics, Wilfrid Laurier University

No WP2011/2, Working Papers from University of Haifa, Department of Economics

Abstract: We describe a simple 2-stage mechanism that induces two bargainers to be truthful in reporting their reservation prices in a 1st stage. If these prices criss-cross, the referee reports that they overlap, and the bargainers proceed to make offers in a 2nd stage. The average of the 2nd-stage offers becomes the settlement if both offers fall into the overlap interval; if only one offer falls into this interval, it is the settlement, but is implemented with probability 1/2; if neither offer falls into the interval, there is no settlement. Thus, if the bargainers reach the 2nd stage, they know their reservation prices overlap even if they fail to reach a settlement, possibly motivating them to try again.

Keywords: Bargaining; truth-telling mechanisms; probabilistic implementation (search for similar items in EconPapers)
JEL-codes: C72 C78 (search for similar items in EconPapers)
Pages: 16
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hevra.haifa.ac.il/econ/wp_files/wp201102.pdf (application/pdf)

Related works:
Journal Article: A Simple Bargaining Mechanism that Elicits Truthful Reservation Prices (2015)
Working Paper: A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:haf:huedwp:wp201102

Access Statistics for this paper

More papers in Working Papers from University of Haifa, Department of Economics 199 Aba Khoushy Ave., Mount Carmel, Haifa, Israel, 3498838. Contact information at EDIRC.
Bibliographic data for series maintained by Anna Rubinchik ().