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Cheap Talk, Round Numbers, and the Economics of Negotiation

Backus, Matthew - 2015

Can sellers credibly signal their private information to reduce frictions in negotiations? Guided by a simple cheap-talk model, we posit that impatient sellers use round numbers to signal their willingness to cut prices in order to sell faster, and test its implications using millions of online...

Persistent link: https://www.econbiz.de/10013020716

Persuading with Anecdotes

Haghtalab, Nika; Immorlica, Nicole; Lucier, Brendan; … - 2022

We study a model of social learning and communication using hard anecdotal evidence. There are two Bayesian agents (a sender and a receiver) who wish to communicate. The receiver must take an action whose payoff depends on their personal preferences and an unknown state of the world. The sender...

Persistent link: https://www.econbiz.de/10014243362

A Theory of Income Smoothing When Insiders Know More than Outsiders

Acharya, Viral V. - 2011

We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders' expectations based on publicly...

Persistent link: https://www.econbiz.de/10013117203

Strategic Investment in a Debt Bargaining Framework

Aizenman, Joshua - 2008

This paper analyzes the strategic role of investment from a debtor country's perspective. The framework is one in which, if the debtor country is unable to meet debt obligations, a bargaining regime determines the amount of debt repayment. In the context of a two-country real trade model, debt...

Persistent link: https://www.econbiz.de/10012774533

Sovereign-Debt Renegotiations : a Strategic Analysis

Fernández, Raquel; Rosenthal, Robert W. - 2021

The process of debt-rescheduling between a creditor and a sovereign (LDC) debtor is modeled as a noncooperative game built on a one-sector growth model. The creditor's threat to impose default penalties is ignored here as inherently incredible; instead, the debtor's motivation for repayment is to...

Persistent link: https://www.econbiz.de/10013248422

Game Modelling the Tokyo Round of Tariff Negotiations

Baldwin, Robert E.; Clarke, Richard N. - 2022

Using actual trade and tariff data for the United States and the European Community, this paper demonstrates how a trade negotiation such as the Tokyo Round, can be modelled as a game among countries attempting to minimize individual welfare loss functions. Once welfare functions are...

Persistent link: https://www.econbiz.de/10013322334

Communication and Bargaining Breakdown : An Empirical Analysis

Backus, matthew; Blake, Thomas; Pettus, Jett; Tadelis, … - 2022

Bargaining breakdown—whether as delay, conflict, or missing trade—plagues bargaining in environments with incomplete information. Can a bargaining environment that facilitates or restricts communication alleviate these costs? We exploit a unique opportunity to study this question using real...

Persistent link: https://www.econbiz.de/10014091401

Moral Costs and Rational Choice : Theory and Experimental Evidence

Cox, James C. - 2016

the empirical evidence, showing that recent work challenges convex preference theory but is largely consistent with … rational choice theory. Guided by this understanding, we design a new, more demanding test of a central tenet of economics …, we show that sharing choices violate the contraction axiom. We advance a new theory that augments standard models with …

Persistent link: https://www.econbiz.de/10012992647

Neighborhood-Based Information Costs

Hebert, Benjamin; Woodford, Michael - 2022

We derive a new cost of information in rational inattention problems, the neighborhood-based cost functions, starting from the observation that many settings involve exogenous states with a topological structure. These cost functions are uniformly posterior-separable and capture notions of...

Persistent link: https://www.econbiz.de/10013314321

Learning and Disagreement in an Uncertain World

Acemoglu, Daron - 2010

Most economic analyses presume that there are limited differences in the prior beliefs of individuals, as assumption most often justified by the argument that sufficient common experiences and observations will eliminate disagreements. We investigate this claim using a simple model of Bayesian...

Persistent link: https://www.econbiz.de/10012760581

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