A Simple Bargaining Mechanism that Elicits Truthful Reservation Prices

Steven J. Brams, Todd R. Kaplan, D. Marc Kilgour

Research output: Contribution to journalArticlepeer-review


We describe a simple 2-stage mechanism whereby for two bargainers, a Buyer and a Seller, it is a weakly dominant strategy to report their true reservation prices in the 1st stage. If the Buyer reports a higher reservation price than the Seller, then the referee announces that there is a possibility for trade, and the bargainers proceed to make offers in a 2nd stage. The average of the 2nd-stage offers becomes the settlement if they both fall into the interval between the reported reservation prices; if only one offer falls into this interval, it is the settlement, but it is implemented with probability $$\frac{1}{2}$$12; if neither offer falls into the interval, there is no settlement. Comparisons are made with other bargaining mechanisms.

Original languageEnglish
Pages (from-to)401-413
Number of pages13
JournalGroup Decision and Negotiation
Issue number3
StatePublished - 1 May 2015

Bibliographical note

Publisher Copyright:
© 2014, Springer Science+Business Media Dordrecht.


  • Bargaining
  • Incomplete information
  • Probabilistic implementation
  • Truth-telling mechanisms

ASJC Scopus subject areas

  • General Decision Sciences
  • Arts and Humanities (miscellaneous)
  • General Social Sciences
  • Strategy and Management
  • Management of Technology and Innovation


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