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Abstract

An Agent who owns information that is potentially valuable to a Firm bargains for its sale, without commitment and certification possibilities, short of disclosing it. We propose a model of gradual persuasion and show how gradualism helps mitigate the hold-up problem (that the Firm would not pay once it learns the information). An example illustrates how it is optimal to give away part of the information at the beginning of the bargaining, and sell the remainder in dribs and drabs. The Agent can only appropriate part of the value of information. Introducing a third-party allows her to extract the maximum surplus.

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File URL: http://cowles.econ.yale.edu/P/cd/d17a/d1743-rr.pdf
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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1743R.

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Length: 58 pages
Date of creation: Dec 2009
Date of revision: Nov 2012
Handle: RePEc:cwl:cwldpp:1743rr

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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
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Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Keywords: Value of information; Dynamic game;

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References

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  1. Francoise Forges & Frédéric Koessler, 2006. "Long Persuasion Games," CESifo Working Paper Series 1669, CESifo Group Munich.
  2. Emir Kamenica & Matthew Gentzkow, 2009. "Bayesian Persuasion," NBER Working Papers 15540, National Bureau of Economic Research, Inc.
  3. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
  4. F. Gul, 2000. "Unobservable Investment and the Hold-Up Problem," Princeton Economic Theory Papers 00s10, Economics Department, Princeton University.
  5. Yeon-Koo Che & József Sákovics, 2004. "A Dynamic Theory of Holdup," Econometrica, Econometric Society, vol. 72(4), pages 1063-1103, 07.
  6. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
  7. Leslie M. Marx & Steven A. Matthews, 1997. "Dynamic Voluntary Contribution to a Public Project," Discussion Papers 1188, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Anton, James J & Yao, Dennis A, 2002. "The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting," Review of Economic Studies, Wiley Blackwell, vol. 69(3), pages 513-31, July.
  9. Admati, Anat R & Pfleiderer, Paul, 1988. "Selling and Trading on Information in Financial Markets," American Economic Review, American Economic Association, vol. 78(2), pages 96-103, May.
  10. Olivier Compte & Philippe Jehiel, 2004. "Gradualism in Bargaining and Contribution Games," Review of Economic Studies, Wiley Blackwell, vol. 71(4), pages 975-1000, October.
  11. Admati, Anat R & Pfleiderer, Paul, 1990. "Direct and Indirect Sale of Information," Econometrica, Econometric Society, vol. 58(4), pages 901-28, July.
  12. FORGES, Françoise, . "Equilibria with communication in a job market example," CORE Discussion Papers RP -885, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Landsberger, Michael & Meilijson, Isaac, 1990. "Lotteries, insurance, and star-shaped utility functions," Journal of Economic Theory, Elsevier, vol. 52(1), pages 1-17, October.
  14. James J. Anton & Dennis A. Yao, 2002. "The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 513-531.
  15. Robert J. Aumann & Sergiu Hart, 2002. "Long Cheap Talk," Discussion Paper Series dp284, The Center for the Study of Rationality, Hebrew University, Jerusalem, revised Nov 2002.
  16. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 345-64, July.
  17. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, December.
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Citations

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Cited by:
  1. Thomas J. Miceli, 2010. "The Real Puzzle of Blackmail: An Informational Approach," Working papers 2010-08, University of Connecticut, Department of Economics.
  2. Emir Kamenica & Matthew Gentzkow, 2009. "Bayesian Persuasion," NajEcon Working Paper Reviews 814577000000000369, www.najecon.org.

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