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Efficiency in Bargaining with Information Externalities

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  • Daniel F. Spulber

Abstract

Bargaining is examined for the situation in which each party has private information regarding their valuation of the good as well as the value of the good to the other party. The k-double auction and the first-and-final offer bargaining game are shown not to be ex ante incentive efficient. This result contrasts with the independent private values case. A trading process based on priority pricing is shown to implement the ex ante incentive efficient mechanism.

Suggested Citation

  • Daniel F. Spulber, 1991. "Efficiency in Bargaining with Information Externalities," Discussion Papers 941R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:941r
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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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