Opacity in Bargaining over Public Good Provision

Research output: Contribution to journalResearch articleContributedpeer-review

Abstract

We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will fall short of the socially desirable level. Compared with unilateral delegation, bilateral delegation is never worse from a welfare perspective.

Details

Original languageEnglish
Pages (from-to)1069-1095
Number of pages27
Journal Journal of public economic theory
Volume25
Issue number5
Publication statusPublished - Oct 2023
Peer-reviewedYes

External IDs

Scopus 85153403532
ORCID /0000-0002-5071-7849/work/142250542
WOS 000970230500001

Keywords

Research priority areas of TU Dresden

DFG Classification of Subject Areas according to Review Boards

Keywords

  • bargaining, delegation, incomplete information, opacity, public good provision, transparency, Transparency, Bargaining, Opacity, Incomplete information, Public good provision, Delegation

Library keywords