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Multidimensional Bargaining under Asymmetric Information

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  • Sen, Arijit

Abstract

A buyer with private information regarding marginal valuation bargains with a seller to determine price and quantity of trade. Depending on parameter values, a high-valuation buyer wants either to reveal information to create value or to conceal it to capture value. In the first case, equilibrium trades are efficient. In the second case, the low-valuation buyer purchases less than her efficient quantity, and there can be a one-period delay in trade. The quantity distortion is the only inefficiency that persists when time between offers approaches zero. There exist equilibria that are independent of the seller's prior beliefs. Copyright 2000 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Sen, Arijit, 2000. "Multidimensional Bargaining under Asymmetric Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 425-450, May.
    • Handle: RePEc:ier:iecrev:v:41:y:2000:i:2:p:425-50
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    References listed on IDEAS

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    1. Yao, Zhiyong, 2012. "Bargaining over incentive contracts," Journal of Mathematical Economics, Elsevier, vol. 48(2), pages 98-106.
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    Cited by:

    1. Cordero Salas, Paula, 2016. "Relational Contracts and Product Quality: The Effect of Bargaining Power on Efficiency and Distribution," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-19.
    2. Russo, Carlo & Di Marcantonio, Federica & Cacchiarelli, Luca & Menapace, Luisa & Sorrentino, Alessandro, 2023. "Unfair trading practices and countervailing power," Food Policy, Elsevier, vol. 119(C).
    3. Starkov, Egor, 2023. "Only time will tell: Credible dynamic signaling," Journal of Mathematical Economics, Elsevier, vol. 109(C).
    4. Omonbude, Ekpen J., 2007. "The transit oil and gas pipeline and the role of bargaining: A non-technical discussion," Energy Policy, Elsevier, vol. 35(12), pages 6188-6194, December.
    5. Qi Feng & J. George Shanthikumar, 2018. "Posted Pricing vs. Bargaining in Sequential Selling Process," Operations Research, INFORMS, vol. 66(1), pages 92-103, 1-2.
    6. Arijit Sen, 2017. "Symmetry in Bargaining and Efficient Contracts under Asymmetric Information," Studies in Microeconomics, , vol. 5(2), pages 132-142, December.
    7. Yao, Zhiyong, 2012. "Bargaining over incentive contracts," Journal of Mathematical Economics, Elsevier, vol. 48(2), pages 98-106.
    8. Søren Johansen & Anders Ryghn Swensen, 2021. "Adjustment coefficients and exact rational expectations in cointegrated vector autoregressive models," CREATES Research Papers 2021-10, Department of Economics and Business Economics, Aarhus University.
    9. Qi Feng & Guoming Lai & Lauren Xiaoyuan Lu, 2015. "Dynamic Bargaining in a Supply Chain with Asymmetric Demand Information," Management Science, INFORMS, vol. 61(2), pages 301-315, February.
    10. Zhiyong Yao, 2015. "Immediate Settlement Or Enduring A Strike: The Choice Of Signals," Bulletin of Economic Research, Wiley Blackwell, vol. 67(4), pages 324-335, October.

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