We study Myerson's incomplete information bargaining solution under the assumption of verifiable types. For the case of an informed principal, in which one individual has all the bargaining power, we provide exact characterizations both from the non cooperative and from the cooperative perspective. We then show that the axiomatic characterization can be extended to the case in which both individuals have some bargaining power. Myerson's approach also suggests a new definition of the core that refines Wilson's coarse core. We argue that this refinement captures an important aspect of negotiation at the interim stage.
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number
2002063.
Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
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