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Social Value of Public Information in Bargaining

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  • Deepal Basak

Abstract

We consider a bargaining game in which both sides are uncertain about their opponent’s commitment, which leads to delay and welfare loss in equilibrium. We address the following question: does ex ante better public information about a player improve expected social welfare? We show that if the information cannot turn the bargaining table (turns the weak bargainer into a strong one and vice versa), more information does not help. More information about a weak bargainer has zero impact, whereas that about the strong bargainer is strictly detrimental. Moreover, by specialising in a binary signal structure, we show that if the information is more accurate in every state, it improves social welfare when it can turn the table.

Suggested Citation

  • Deepal Basak, 2024. "Social Value of Public Information in Bargaining," The Economic Journal, Royal Economic Society, vol. 134(660), pages 1356-1378.
    • Handle: RePEc:oup:econjl:v:134:y:2024:i:660:p:1356-1378.
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    File URL: http://hdl.handle.net/10.1093/ej/uead114
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