An Empirical Analysis of Bargaining with Voluntary Transmission of Private Information

University of Alabama Department of Economics Working Paper No. 01-01-03

34 Pages Posted: 31 Jan 2001

See all articles by Paul Pecorino

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies

Mark van Boening

University of Mississippi - Department of Economics

Date Written: January 2001

Abstract

We conduct an experimental analysis of bargaining under asymmetric information, where the dispute resolution mechanism can be interpreted either as a civil trial or conventional arbitration. In our treatment, we allow for credible and costless transmission of private information. Consistent with the theory, we find that plaintiffs with strong cases tend to reveal their private information to the defendant. As a result, this group of plaintiffs experiences a significant drop in their dispute rate under the treatment. We also consider a cheap talk treatment under which transmitted information is not credible. When cheap talk is allowed, transmitted messages are not entirely ignored, but there is no reduction in the dispute rate for plaintiffs with strong cases.

JEL Classification: K4, D8, C7

Suggested Citation

Pecorino, Paul and van Boening, Mark, An Empirical Analysis of Bargaining with Voluntary Transmission of Private Information (January 2001). University of Alabama Department of Economics Working Paper No. 01-01-03, Available at SSRN: https://ssrn.com/abstract=258288 or http://dx.doi.org/10.2139/ssrn.258288

Paul Pecorino (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-0379 (Phone)
205-348-0590 (Fax)

Mark Van Boening

University of Mississippi - Department of Economics ( email )

371 Holman Hall
University, MS 38677
United States

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