Bargaining with Noisy Communication

Garella, Paolo ; Denicolò, Vincenzo (1996) Bargaining with Noisy Communication. Bologna: Dipartimento di Scienze economiche DSE, p. 21. DOI 10.6092/unibo/amsacta/5039. In: Quaderni - Working Paper DSE (271). ISSN 2282-6483.
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Abstract

In this paper we show that in a bargaining situation the seller may not necessarily want to fully exploit communication possibilities. In the standard two-period bargaining model with one-sided incomplete information, the seller, who owns an indivisible good, makes oers which the buyer can either accept or reject. We ask whether the seller can prot from manipulating the communication mechanism by sending offers that reach the buyer with probability less than one (noisy communication). Noisy communication is a way to improve the seller's second period beliefs about the buyer's willingness to pay for the good and is therefore a way to "buy" commitment. We study the case of a discrete distribution of buyer's types and show that there exist equilibria with noisy communication when there are at least three different types of buyers.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Garella, Paolo
Denicolò, Vincenzo
Keywords
Bargaining, Communication, Incomplete Information.
Subjects
ISSN
2282-6483
DOI
Deposit date
04 Apr 2016 09:31
Last modified
04 Apr 2016 09:31
URI

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