Brams, Steven J. and Kaplan, Todd R and Kilgour, D. Marc (2011): A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices.
Download (115kB) | Preview
We describe a simple 2-stage mechanism that induces two bargainers to be truthful in reporting their reservation prices in a 1st stage. If these prices criss-cross, the referee reports that they overlap, and the bargainers proceed to make offers in a 2nd stage. The average of the 2nd-stage offers becomes the settlement if both offers fall into the overlap interval; if only one offer falls into this interval, it is the settlement, but is implemented with probability 1/2; if neither offer falls into the interval, there is no settlement. Thus, if the bargainers reach the 2nd stage, they know their reservation prices overlap even if they fail to reach a settlement, possibly motivating them to try again.
|Item Type:||MPRA Paper|
|Original Title:||A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices|
|Keywords:||Bargaining; truth-telling mechanisms; probabilistic implementation; incomplete information.|
|Subjects:||C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory ; Matching Theory
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict ; Conflict Resolution ; Alliances ; Revolutions
D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, Operations, and Impact
J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J52 - Dispute Resolution: Strikes, Arbitration, and Mediation ; Collective Bargaining
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Todd R Kaplan|
|Date Deposited:||20 Feb 2011 20:19|
|Last Modified:||16 Nov 2016 03:06|
Brams, S.J. and Kilgour, D.M., 1996, ``Bargaining procedures that induce honesty," Group Decision and Negotiation, 5 (3), 239--262.
Brams, S.J., and Kilgour, D.M., 2001, ``Competitive fair division," Journal of Political Economy, 109 (2), 418--443.
Chatterjee, K. and Samuelson, W. 1983, ``Bargaining under incomplete information," Operations Research, 31 (5), 835--851.
Leininger, W., P. B. Linhart, and R. Radner, 1989, ``The sealed-bid mechanism for bargaining with incomplete information," Journal of Economic Theory 48 (1), 63--106.
Myerson, R.B. and Satterthwaite, M.A., 1983, ``Efficient mechanisms for bilateral trading," Journal of Economic Theory, 29 (2), 265--281.
Nisan, N., 2007, ``Introduction to mechanism design (for computer scientists), " in N. Nisan, T. Roughgarden, Eva Tardos, and Vijay V. Vazirani (eds.), Algorithmic Game Theory, Cambridge, UK: Cambridge University Press, 209--241.
Vickrey, W., 1961, ``Counterspeculation, auctions, and competitive sealed bid tenders," Journal of Finance 26 (March): 8--37.