Robust Predictions in Coasian Bargaining
- (pp. 209-22)
Abstract
This paper studies robust predictions when players may have additional information in an otherwise standard seller-offer bargaining with private values. Players' extra information gives rise to higher-order uncertainties about the underlying surplus. We show that the equilibrium outcomes in the frequent-offer limit depend critically on the nature of second-order uncertainty: (i) when the seller's beliefs about the buyer's values are public, the limiting equilibrium outcomes are efficient and any surplus division is possible; (ii) when the seller's beliefs are private, any feasible and individually rational payoffs can be the limiting equilibrium payoffs.Citation
Liu, Heng. 2022. "Robust Predictions in Coasian Bargaining." American Economic Review: Insights, 4 (2): 209-22. DOI: 10.1257/aeri.20210144Additional Materials
JEL Classification
- C78 Bargaining Theory; Matching Theory
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness