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The Role of Information in Different Bargaining Protocols

  • Rafael Hortala-Vallve

    (Government Department, London School of Economics)

  • Aniol Llorente-Saguer

    ()

    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Rosemarie Nagel

    (Universitat Pompeu Fabra, ICREA)

We analyze a bargaining protocol recently proposed in the literature vis-à-vis unconstrained negotiation. This new mechanism extracts “gains from trade” inherent in the differing valuation of two parties towards various issues where conflict exists. We assess the role of incomplete vs. complete information in the efficiency achieved by this new mechanism and by unconstrained negotiation. We find that unconstrained negotiation does best under a situation of complete information where the valuations of both bargaining parties are common knowledge. Instead, the newly proposed mechanism does best in a situation with incomplete information. The sources of inefficiencies in each of the two cases arise from the different strategic use of the available information.

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Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2012_12.

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Date of creation: May 2012
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Handle: RePEc:mpg:wpaper:2012_12
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  1. Alessandra Casella & Thomas Palfrey & Raymond Riezman, 2005. "Minorities and Storable Votes," Economics Working Papers 0059, Institute for Advanced Study, School of Social Science.
  2. repec:cup:cbooks:9780521556446 is not listed on IDEAS
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  6. Sergiu Hart, 2008. "Discrete Colonel Blotto and General Lotto games," International Journal of Game Theory, Springer, vol. 36(3), pages 441-460, March.
  7. Rafael Hortala-Vallve, 2007. "Qualitative Voting," Economics Series Working Papers 320, University of Oxford, Department of Economics.
  8. Ariel Rubinstein, 2007. "Instinctive and Cognitive Reasoning: A Study of Response Times," Economic Journal, Royal Economic Society, vol. 117(523), pages 1243-1259, October.
  9. Hortala-Vallve, Rafael & Llorente-Saguer, Aniol, 2010. "A simple mechanism for resolving conflict," Games and Economic Behavior, Elsevier, vol. 70(2), pages 375-391, November.
  10. Mitzkewitz, Michael & Nagel, Rosemarie, 1993. "Experimental Results on Ultimatum Games with Incomplete Information," International Journal of Game Theory, Springer, vol. 22(2), pages 171-98.
  11. Alessandra Casella, 2002. "Storable Votes," NBER Working Papers 9189, National Bureau of Economic Research, Inc.
  12. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-26, December.
  13. Engelmann, Dirk & Grimm, Veronika, 2008. "Mechanisms for efficient voting with private information about preferences," IWQW Discussion Paper Series 03/2008, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  14. Roth, Alvin E & Murnighan, J Keith, 1982. "The Role of Information in Bargaining: An Experimental Study," Econometrica, Econometric Society, vol. 50(5), pages 1123-42, September.
  15. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  16. Ben Greiner, 2004. "The Online Recruitment System ORSEE - A Guide for the Organization of Experiments in Economics," Papers on Strategic Interaction 2003-10, Max Planck Institute of Economics, Strategic Interaction Group.
  17. Roth, Alvin E & Murnighan, J Keith & Schoumaker, Francoise, 1988. "The Deadline Effect in Bargaining: Some Experimental Evidence," American Economic Review, American Economic Association, vol. 78(4), pages 806-23, September.
  18. Rafael Hortala-Vallve & Aniol Llorente-Saguer, 2012. "Pure strategy Nash equilibria in non-zero sum colonel Blotto games," International Journal of Game Theory, Springer, vol. 41(2), pages 331-343, May.
  19. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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