The Role of Information in Different Bargaining Protocols

30 Pages Posted: 22 Jun 2012

See all articles by Rafael Hortala-Vallve

Rafael Hortala-Vallve

London School of Economics & Political Science (LSE) - Department of Government

Aniol Llorente-Saguer

Queen Mary University of London

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics

Date Written: May 2012

Abstract

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.

Suggested Citation

Hortala-Vallve, Rafael and Llorente-Saguer, Aniol and Nagel, Rosemarie, The Role of Information in Different Bargaining Protocols (May 2012). MPI Collective Goods Preprint, No. 2012/12. Available at SSRN: https://ssrn.com/abstract=2083497 or http://dx.doi.org/10.2139/ssrn.2083497

Rafael Hortala-Vallve

London School of Economics & Political Science (LSE) - Department of Government ( email )

Northampton NN7 1NE
United Kingdom

Aniol Llorente-Saguer (Contact Author)

Queen Mary University of London ( email )

Lincoln's Inn Fields
Mile End Rd.
London, E1 4NS
United Kingdom

HOME PAGE: http://https://sites.google.com/site/aniollls/

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain
+34 93 542 3729 (Phone)
+34 93 542 1746 (Fax)

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