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On the Value of Transparency and Information Acquisition in Bargaining

Author

Listed:
  • Gehrig Thomas

    (University of Vienna,Vienna, Austria)

  • Levínský René

    (Center for Economic Research and Graduate Education and Economics Institute (CERGE-EI),Washington, United States of America)

  • Güth Werner

    (Libera Universita Internazionale degli Studi Sociali Guido Carli, Frankfurt School of Finance and Management, Max Planck Institute for Research on Collective Goods,Roma, Italy)

Abstract

We analyze how transparency affects information acquisition in a bargaining context where proposers may choose to purchase information about the unknown outside options of their bargaining partners. Although information acquisition is excessive in all scenarios, we find that bargaining outcomes depend crucially on the transparency of the bargaining environment. In transparent games, when responders can observe whether proposers have acquired information, acceptance rates are higher. Accordingly, in transparent bargaining environments, information is more valuable, both individually and socially.

Suggested Citation

  • Gehrig Thomas & Levínský René & Güth Werner, 2016. "On the Value of Transparency and Information Acquisition in Bargaining," German Economic Review, De Gruyter, vol. 17(3), pages 337-358, August.
    • Handle: RePEc:bpj:germec:v:17:y:2016:i:3:p:337-358
    DOI: 10.1111/geer.12101
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