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Bargaining and Information Acquisition

Author

Listed:
  • Kalyan Chatterjee
  • Miaomiao Dong
  • Tetsuya Hoshino

Abstract

We consider an ultimatum game where the value of the object being sold to the buyer is high or low. The seller knows the value, but the buyer does not. The value to the seller is zero. We introduce the option for the buyer to acquire costly information after an offer is made. This information either confirms the high value or provides no information. As the cost of information vanishes, the buyer gets all the surplus in a refinement of perfect Bayesian equilibrium, although the option to acquire information is never used. Moreover, this signal structure is optimal for the buyer.

Suggested Citation

  • Kalyan Chatterjee & Miaomiao Dong & Tetsuya Hoshino, 2025. "Bargaining and Information Acquisition," American Economic Journal: Microeconomics, American Economic Association, vol. 17(3), pages 75-102, August.
    • Handle: RePEc:aea:aejmic:v:17:y:2025:i:3:p:75-102
    DOI: 10.1257/mic.20240034
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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