Bargaining with Asymmetric Costs for Information

32 Pages Posted: 8 Jul 2011

See all articles by Vincent Glode

Vincent Glode

University of Pennsylvania - The Wharton School; University of Pennsylvania - Finance Department

Richard Lowery

University of Texas-Austin

Date Written: July 7, 2011

Abstract

We generalize and correct a model of bargaining with endogenous information acquisition proposed by Dang (2008). Allowing for asymmetric information costs, we show that the opportunity to obtain information during the bargaining process can lead to inefficient outcomes when the responder's cost of obtaining this information is low. We then show that, for very low costs, this inefficiency is robust to allowing agents to voluntarily increase their own information costs and potentially eliminate adverse selection problems.

Keywords: Bargaining, Information Acquisition, Adverse Selection

Suggested Citation

Glode, Vincent and Glode, Vincent and Lowery, Richard, Bargaining with Asymmetric Costs for Information (July 7, 2011). Available at SSRN: https://ssrn.com/abstract=1880939 or http://dx.doi.org/10.2139/ssrn.1880939

Vincent Glode

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

Richard Lowery (Contact Author)

University of Texas-Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States

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