A Mechanism to Improve Efficiency for Negotiations with Incomplete Information
Classic results in bargaining theory state that private information necessarily prevents the bargainers from reaping all possible gains from trade. In this paper we propose a mechanism for improving efficiency of negotiation outcome for multilateral negotiations with incomplete information. This objective is achieved by introducing biased distribution of resulting gains from trade to prevent bargainers from misrepresenting their valuations of the negotiation outcomes. Our mechanism is based on rewarding concession-making agents with larger shares of the obtainable surplus. We show that the likelihood for the negotiators to reach agreement is accordingly increased and the negotiation efficiency is improved.
KeywordsNash Equilibrium Private Information Bargaining Problem Negotiation Protocol Costly Delay
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