Working Paper: CEPR ID: DP5817
Authors: Thomas Gehrig; Werner Güth; Ren Levinsky
Abstract: We analyze how transparency affects information acquisition in a bargaining context, where proposers may chose to purchase information about the unknown outside option of their bargaining partner. Although information acquisition is excessive in all our scenarios we find that the bargaining outcome depends crucially on the transparency of the bargaining environment. In transparent games, when responders can observe whether proposers have acquired information, acceptance rates are higher. Accordingly, in transparent bargaining environments information is more valuable, both individually and socially.
Keywords: information acquisition; transparency; ultimatum experiment
JEL Codes: C91; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| transparency (G38) | acceptance rates (C52) |
| transparency (G38) | information acquisition (D83) |
| information acquisition (D83) | bargaining outcomes (C78) |
| excessive investment in information (D83) | inefficient outcomes (D61) |
| lack of transparency (D82) | overestimation of information value (D83) |
| transparency about informational endowment (D83) | individual payoffs (C72) |
| social value of information (D83) | transparency (G38) |