A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices
AbstractWe describe a simple 2-stage mechanism that induces two bargainers to be truthful in reporting their reservation prices in a 1st stage. If these prices criss-cross, the referee reports that they overlap, and the bargainers proceed to make offers in a 2nd stage. The average of the 2nd-stage offers becomes the settlement if both offers fall into the overlap interval; if only one offer falls into this interval, it is the settlement, but is implemented with probability 1/2; if neither offer falls into the interval, there is no settlement. Thus, if the bargainers reach the 2nd stage, they know their reservation prices overlap even if they fail to reach a settlement, possibly motivating them to try again.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 28999.
Date of creation: 18 Feb 2011
Date of revision:
Bargaining; truth-telling mechanisms; probabilistic implementation; incomplete information.;
Other versions of this item:
- Brams, Steven J. & Kaplan, Todd & Kilgour, D. Marc, . "A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices," Working Papers WP2011/2, University of Haifa, Department of Economics, revised 22 Feb 2011.
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-26 (All new papers)
- NEP-CTA-2011-02-26 (Contract Theory & Applications)
- NEP-GTH-2011-02-26 (Game Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven J. Brams & D. Marc Kilgour, 2001.
"Competitive Fair Division,"
Journal of Political Economy,
University of Chicago Press, vol. 109(2), pages 418-443, April.
- Myerson, Roger B. & Satterthwaite, Mark A., 1983.
"Efficient mechanisms for bilateral trading,"
Journal of Economic Theory,
Elsevier, vol. 29(2), pages 265-281, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.