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Information and evidence in bargaining

Author

Listed:
  • Péter Eső

    (University of Oxford)

  • Chris Wallace

    (University of Leicester)

Abstract

In a simple bilateral bargaining model with two-sided private information, players may receive signals about the value of the available surplus. The equilibrium of this game when signals are unverifiable information is qualitatively different from when they constitute verifiable evidence: in the latter case some proposer types will always separate, whereas in the former no information is ever transmitted. Despite the presence of “unraveling”, the proposer is always better off with verifiable evidence, although efficiency may be adversely affected. Interpreting the ability to generate verifiable evidence as bargaining skill, a player benefits from being more skilful and may also be better off with a more skilful rival.

Suggested Citation

  • Péter Eső & Chris Wallace, 2014. "Information and evidence in bargaining," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(1), pages 23-32, April.
    • Handle: RePEc:spr:etbull:v:2:y:2014:i:1:d:10.1007_s40505-013-0023-3
    DOI: 10.1007/s40505-013-0023-3
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    References listed on IDEAS

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    Cited by:

    1. Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling with costly acquisition of signals," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 141-150.
    2. Eso, Peter & Wallace, Chris, 2016. "Persuasion and Pricing : Dynamic Trading with Hard Evidence," CRETA Online Discussion Paper Series 24, Centre for Research in Economic Theory and its Applications CRETA.
    3. Péter Eso & Chris Wallace, 2022. "Evidence Disclosure in Competitive Markets," Economics Series Working Papers 980, University of Oxford, Department of Economics.

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    More about this item

    Keywords

    Bargaining; Two-sided private information; Unverifiable information; Verifiable evidence;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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