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  3. American Economic Journal: Microeconomics
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  5. Bargaining and Information Acquisition

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Bargaining and Information Acquisition

  • Kalyan Chatterjee
  • Miaomiao Dong
  • Tetsuya Hoshino
American Economic Journal: Microeconomics (Forthcoming)

Abstract

We consider an ultimatum game where the value of the object to the buyer is either high or low. The seller knows the value but the buyer does not. The value to the seller is zero. We introduce the option for the buyer to acquire costly information after an offer is made. This information either confirms the high value or provides no information. As the cost of information vanishes, the buyer gets all the surplus in a refinement of perfect Bayesian equilibrium although the option to acquire information is never used. Moreover, this signal structure is optimal for the buyer.

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