Working Paper: CEPR ID: DP16326
Authors: Nabil I. Alnajjar; Robert Garybobo
Abstract: A group of experts with different prior beliefs must choose a treatment. A dataset is made public and leads to revisions of beliefs. We propose a model where the experts' disagreements are resolved through bargaining, using the Nash bargaining solution. Experts bargain after disclosure of the dataset. Bargaining may lead to an inefficient use of information in a strong sense: experts receive a lower payoff in every state, and for any prior belief (i.e., inadmissibility). Bargaining exhibits under-reaction to information as compared to the normative solution in which experts bargain ex ante on the procedure used to exploit the data.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| experts with different prior beliefs bargain over treatment choices (C78) | Nash bargaining solution leads to inefficient outcomes (C78) |
| Nash bargaining solution leads to systematic underreaction to new public information (C78) | collective decisions exhibit inertia (D70) |
| interim bargaining after new evidence is revealed (J52) | decisions that are inadmissible (K41) |
| lack of ex ante commitments exacerbates inefficiency (D61) | interim decisions tend to be overly cautious (D91) |
| interim bargaining process (J52) | Pareto inefficiency when beliefs are sufficiently diverse (D89) |