Efficiency in Bargaining with Information Externalities

Daniel Spulber

No 941R, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: Bargaining is examined for the situation in which each party has private information regarding their valuation of the good as well as the value of the good to the other party. The k-double auction and the first-and-final offer bargaining game are shown not to be ex ante incentive efficient. This result contrasts with the independent private values case. A trading process based on priority pricing is shown to implement the ex ante incentive efficient mechanism.

JEL-codes: C7 D82 (search for similar items in EconPapers)
Date: 1991-12
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