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On bargaining with endogenous information

Author

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  • Dang, Tri Vi

Abstract

Two ex ante identically informed agents play a double auction over the division of a trading surplus with endogenous information and common values. This paper shows that if information acquisition is not observable, three types of inefficiencies can arise. If the information cost is in an intermediate range, no pure strategy equilibrium with trade exists although the agents maintain symmetric information. If the information cost is low, any trading equilibrium exhibits costly information acquisition. If the agents face asymmetric information cost the Akerlof’s lemons problem arises as a self-fulfilling equilibrium and only partial trade occurs.

Suggested Citation

  • Dang, Tri Vi, 2005. "On bargaining with endogenous information," Papers 05-38, Sonderforschungsbreich 504.
    • Handle: RePEc:mnh:spaper:2623
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    File URL: https://madoc.bib.uni-mannheim.de/2623/1/dp05_38.pdf
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    More about this item

    Keywords

    double auction ; endogenous lemons problem ; information acquisition ; speculation;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • 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

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