Economic Theory and Experimental Seminar - Isaias Chavez (Northwestern University)

Room 315, Level 3, FBE Building, 111 Barry Street, Carlton

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Alex Nichifor

nichifor@unimelb.edu.au

T: +61383447420

Title: Privacy in Bargaining: The Case of Endogenous Entry

Abstract: I study the role of privacy in bargaining. A seller makes offers every instant, without commitment, to a privately informed buyer. Potential competing buyers (entrants) can choose to interrupt the negotiation by triggering a bidding war. Entrants either observe the offers (public bargaining) or only observe the bargaining delay but not the offers (private bargaining). When buyers’ values are independent and private, making the negotiation private typically benefits the seller, raises prices, and increases delay. For more general common/correlated value structures, I identify a property of the distribution of buyers’ values that largely governs the equilibrium effects of privacy.