Cheap talk comparisons in multi-issue bargaining

Abstract

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Overcoming Incentive Constraints by Linking Decisions

“…Equilibria in many incomplete information repeated games are bounded away from efficiency (e.g., see Fudenberg and Levine (1994)). 4 A short list of other research that involves the linking of decisions includes logrolling (e.g., Tullock (1970), Wilson (1969), Miller (1977), bundling of goods by a monopolist (Adams andYellen (1976), McAfee, McMillan, andWhinston (1979), Chakraborty and Harbaugh (2003), Armstrong (1999), Bakos andBrynjolfsson (1999, 2000)), agency problems (Maskin and Tirole (1990)), and subsequent papers by Fang and Norman (2003), who examined the efficiency gains from the bundling of excludable public goods, and Hörner and Jamison (2004), who examined collusion in a repeated Bertrand game. Although some of these papers also rely on laws of large numbers (e.g., Armstrong (1999), Bakos andBrynjolfsson (1999, 2000)), our approach differs in showing that ex ante Pareto efficiency of a social choice function or allocation rule can be used to give agents incentives to report their types as truthfully as possible and, moreover, that this applies to any collective decision problem.…”

Best foot forward or best for last in a sequential auction?

“…The issue of how to credibly reveal ordinal information is more general than sequential auctions (Chakraborty, Gupta, and Harbaugh, 2002;Chakraborty and Harbaugh, 2003). While seller statements about the values of their goods are normally suspect, ordinal signals can be part of an equilibrium strategy since they simultaneously reveal both good and bad information.…”

“…Since deviation is not profitable best foot forward is an equilibrium. 7 It may seem that the problem is symmetric and best for last is also an equilibrium. Checking, buyers believe the first period good is high value only if both goods are high value so the first period price is…”

“…The correlation coefficient between V 1 and V 2 is ρ = 1 3 in both cases. With binary values non-negative correlation is equivalent to affiliation, which is the basis for the theoretical results in the next section 7. We have ignored the cases where both goods are high or low value and the seller just randomizes.Adding these cases the expected payoff from sticking to best foot forward is 3/4 + (1/4)(1/3) + (1/2)(1/3) + (1/4)0 = 1 and the expected payoff from deviating is 3/4 + (1/4)(1/3) + (1/2)0 + (1/4)0 = 5/6.…”

Deliberation and Security Design in Bankruptcy

“…5 Again, despite the large literature on bargaining theory, there are few papers that incorporate communication in bargaining. Exceptions are Farrell and Gibbons (1989), Crawford (1990), Chakraborty and Harbaugh (2003) and Meirowitz (2007).…”