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Two-person bargaining with verifiable information

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  • DE CLIPPEL, Geoffroy
  • MINELLI, Enrico

Abstract

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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Suggested Citation

  • DE CLIPPEL, Geoffroy & MINELLI, Enrico, 2004. "Two-person bargaining with verifiable information," CORE Discussion Papers RP 1733, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:1733 Note: In : Journal of Mathematical Economics, 40, 799-813, 2004.
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    File URL: http://dx.doi.org/10.1016/j.jmateco.2003.07.001
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    References listed on IDEAS

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    1. Myerson, Roger B, 1983. "Mechanism Design by an Informed Principal," Econometrica, Econometric Society, vol. 51(6), pages 1767-1797, November.
    2. Grossman, Sanford J. & Perry, Motty, 1986. "Perfect sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 39(1), pages 97-119, June.
    3. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    4. Myerson, Roger B., 1989. "Credible negotiation statements and coherent plans," Journal of Economic Theory, Elsevier, vol. 48(1), pages 264-303, June.
    5. Wilson, Robert B, 1978. "Information, Efficiency, and the Core of an Economy," Econometrica, Econometric Society, vol. 46(4), pages 807-816, July.
    6. Myerson, Roger B, 1984. "Two-Person Bargaining Problems with Incomplete Information," Econometrica, Econometric Society, vol. 52(2), pages 461-487, March.
    7. Radner, Roy, 1979. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Econometrica, Econometric Society, vol. 47(3), pages 655-678, May.
    8. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    9. John C. Harsanyi & Reinhard Selten, 1972. "A Generalized Nash Solution for Two-Person Bargaining Games with Incomplete Information," Management Science, INFORMS, vol. 18(5-Part-2), pages 80-106, January.
    10. Roy Radner, 1997. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Levine's Working Paper Archive 1594, David K. Levine.
    11. Aumann, Robert J, 1985. "An Axiomatization of the Non-transferable Utility Value," Econometrica, Econometric Society, vol. 53(3), pages 599-612, May.
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    Citations

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    Cited by:

    1. Adam Kalai & Ehud Kalai, 2011. "Cooperation in Strategic Games Revisited," Discussion Papers 1512, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. de Clippel, Geoffroy, 2007. "The type-agent core for exchange economies with asymmetric information," Journal of Economic Theory, Elsevier, vol. 135(1), pages 144-158, July.
    3. de Clippel, Geoffroy & Pérez-Castrillo, David & Wettstein, David, 2012. "Egalitarian equivalence under asymmetric information," Games and Economic Behavior, Elsevier, vol. 75(1), pages 413-423.
    4. Okada, Akira, 2016. "A non-cooperative bargaining theory with incomplete information: Verifiable types," Journal of Economic Theory, Elsevier, vol. 163(C), pages 318-341.
    5. Francoise Forges, 2006. "The Ex Ante Incentive Compatible Core in Exchange Economies with and without Indivisibilities," CESifo Working Paper Series 1686, CESifo Group Munich.
    6. Mylovanov, Timofiy & Tröger, Thomas, 2012. "Informed principal problems in generalized private values environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    7. repec:dau:papers:123456789/8158 is not listed on IDEAS
    8. Thomas Tröger & Tymofiy Mylovanov, 2008. "Optimal Auction Design and Irrelevance of Private Information," Bonn Econ Discussion Papers bgse21_2008, University of Bonn, Germany.
    9. Kim, Jin Yeub, 2017. "Interim third-party selection in bargaining," Games and Economic Behavior, Elsevier, vol. 102(C), pages 645-665.
    10. Geoffroy de Clippel, 2010. "Copmment on Egalitarianism under Incomplete Information," Working Papers 2010-4, Brown University, Department of Economics.

    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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