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Opacity in Bargaining over Public Good Provision

Author

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  • Julian Lamprecht
  • Marcel Thum

Abstract

We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents, whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will, however, fall short of the socially desirable level. Compared to unilateral delegation, bilateral delegation is never worse from a welfare perspective.

Suggested Citation

  • Julian Lamprecht & Marcel Thum, 2022. "Opacity in Bargaining over Public Good Provision," CESifo Working Paper Series 9871, CESifo.
    • Handle: RePEc:ces:ceswps:_9871
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9871.pdf
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    References listed on IDEAS

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    1. Beccherle, Julien & Tirole, Jean, 2011. "Regional initiatives and the cost of delaying binding climate change agreements," Journal of Public Economics, Elsevier, vol. 95(11), pages 1339-1348.
    2. Stephen R. G. Jones, 1989. "The Role of Negotiators in Union-Firm Bargaining," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 630-642, August.
    3. Kai A. Konrad & Marcel Thum, 2014. "Climate Policy Negotiations with Incomplete Information," Economica, London School of Economics and Political Science, vol. 81(322), pages 244-256, April.
    4. Segendorff, Bjorn, 1998. "Delegation and Threat in Bargaining," Games and Economic Behavior, Elsevier, vol. 23(2), pages 266-283, May.
    5. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    6. Kai A. Konrad & Marcel Thum, 2020. "Equilibrium opacity in ultimatum‐offer bargaining," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1515-1529, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    public good provision; transparency; opacity; bargaining; incomplete information; delegation;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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