Asymmetric information can lead to inefficient outcomes in many bargaining contexts. It is sometimes natural to think of asymmetric information as emerging from imperfect observation of previously taken actions (e.g., obtaining compliments or substitutes for the item being bargained over). How do such strategic investment choices prior to bargaining interact with the strategic problem of bargaining under private information?
Author(s): Adam Meirowitz, Massimo Morelli, Kristopher W. Ramsay, Francesco Squintani