A Simple Bargaining Mechanism that Elicits Truthful Reservation Prices

@article{Brams2011ASB,
  title={A Simple Bargaining Mechanism that Elicits Truthful Reservation Prices},
  author={S. Brams and Todd R. Kaplan and D. Kilgour},
  journal={Cognitive Social Science eJournal},
  year={2011}
}
We describe a simple 2-stage mechanism that induces two bargainers to be truthful in reporting their reservation prices in a 1st stage. If these prices criss-cross, the referee reports that they overlap, and the bargainers proceed to make offers in a 2nd stage. The average of the 2nd-stage offers becomes the settlement if both offers fall into the overlap interval; if only one offer falls into this interval, it is the settlement, but is implemented with probability 1/2; if neither offer falls… Expand
2 Citations
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