Brams, Steven J. and Kaplan, Todd R and Kilgour, D. Marc (2011): A Simple Bargaining Mechanism That Elicits Truthful Reservation Prices.
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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
D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, and Operations
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:||20. Feb 2013 06:39|
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