Efficient and Neutral Mechanisms in Almost Ex Ante Bargaining Problems
36 Pages Posted: 10 Mar 2017 Last revised: 16 Jun 2020
Date Written: May 29, 2018
I consider two-person bargaining problems in which mechanism is selected at the almost ex ante stage---when there is some positive probability that players may have learned their private types---and the chosen mechanism is implemented at the interim stage. For these problems, I define almost ex ante incentive efficient mechanisms and apply the concept of neutral optima (Myerson 1984). I show that those mechanisms may not be ex ante incentive efficient. This note suggests that ex ante incentive efficient mechanisms are not robust to a perturbation of the ex ante informational structure at the time of mechanism selection.
Keywords: Bargaining, incomplete information, mechanism selection, almost ex ante stage, incentive efficiency, neutral optima
JEL Classification: C71, C78, D74, D82
Suggested Citation: Suggested Citation