Three procedures for inducing honesty in bargaining

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

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

A bargaining procedure, or mechanism, is a set of rules for two bargainers to follow as they make offers in order to reach a mutually satisfactory agreement on, say, a price. The efficiency of a mechanism is the expected surplus it delivers to the bargainers, relative to the surplus that a social planner would deliver, or that the bargainers themselves might achieve if they truthfully revealed their reservation prices. A theoretical limit on this efficiency is known, as is a specific procedure that achieves this maximum. But this procedure induces players to make offers that do not truly reflect their reservation prices. This paper discusses three procedures that induce honest offers, although they necessarily fail to achieve maximum efficiency. Each procedure has its own characteristics and costs, and each may have some uses in particular circumstances.

Original languageEnglish
Title of host publicationTARK XIII
Subtitle of host publicationTheoretical Aspects of Rationality and Knowledge - Proceedings of the 13th Conference, TARK 2011
Pages170-176
Number of pages7
DOIs
StatePublished - 2011
Event13th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2011 - Groningen, Netherlands
Duration: 12 Jul 201114 Jul 2011

Publication series

NameACM International Conference Proceeding Series

Conference

Conference13th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2011
Country/TerritoryNetherlands
CityGroningen
Period12/07/1114/07/11

Keywords

  • bargaining
  • incomplete information
  • truth-telling mechanisms

ASJC Scopus subject areas

  • Software
  • Human-Computer Interaction
  • Computer Vision and Pattern Recognition
  • Computer Networks and Communications

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