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Multidimensional Bargaining Under Asymmetric Information[Note 1. I thank Lawrence Ausubel, with whom I have had ...]
Author(s) -
Sen Arijit
Publication year - 2000
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.00070
Subject(s) - inefficiency , valuation (finance) , microeconomics , private information retrieval , economics , marginal value , distortion (music) , information asymmetry , zero (linguistics) , value (mathematics) , complete information , econometrics , computer science , mathematics , statistics , finance , amplifier , computer network , linguistics , philosophy , bandwidth (computing)
A buyer with private information regarding marginal valuation bargains with a seller to determine price and quantity of trade. Depending on parameter values, a high‐valuation buyer wants either to reveal information to create value or to conceal it to capture value. In the first case, equilibrium trades are efficient. In the second case, the low‐valuation buyer purchases less than her efficient quantity, and there can be a one‐period delay in trade. The quantity distortion is the only inefficiency that persists when time between offers approaches zero. There exist equilibria that are independent of the seller's prior beliefs.