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Bargaining with learning

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  • Hossain, Tanjim

Abstract

We analyze two simple models of bargaining games with two-sided incomplete information where players have imperfect information about their own valuation. We suggest a model for learning by players about their own valuations during the bargaining process. Specifically, when the minimum price the buyer has to pay (or the maximum price a seller can obtain) is clear to her, it triggers a costless learning of whether her valuation is above that price. Under such learning, we show that there is an ex post efficient equilibrium in both models. Thus, a very simple model of learning about one’s own type can circumvent the Myerson–Satterthwaite theorem.

Suggested Citation

  • Hossain, Tanjim, 2019. "Bargaining with learning," Journal of Mathematical Economics, Elsevier, vol. 82(C), pages 90-97.
    • Handle: RePEc:eee:mateco:v:82:y:2019:i:c:p:90-97
    DOI: 10.1016/j.jmateco.2019.02.002
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