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Three Essays on Bargaining over Decision Rights and Contests

Lim, Wooyoung (2010) Three Essays on Bargaining over Decision Rights and Contests. Doctoral Dissertation, University of Pittsburgh. (Unpublished)

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This dissertation consists of three chapters where the first two chapters study models ofbargaining over decision rights and the third chapter studies a model of contests.In the first chapter, "Selling Authority," I consider bargaining over decision-making authorityin which an informed but self-interested agent makes a price offer to buy decision-makingauthority to an uninformed principal who then decides either to accept or to rejectthe offer. No matter how large the difference between parties' preferences, there exists acontinuum of perfect Bayesian equilibria, each of which yields an ex-post efficient action forany realization of the state. In these equilibria, delegation takes place with probability one and no information is transmitted, even though the informed agent's price offers could have been used as a signaling device. However, I also construct an infinite sequence of informative equilibria that approximates ex-post efficiency in the limit.The second chapter, "Communication in Bargaining over Deicison Right," develops a model of bargaining over decision-rights between an uninformed principal and an informed but self-interested agent. The uninformed principal makes a price offer to the agent who then decides either to accept or to reject the offer. Contrary to the prediction the Coase Theorem provides, actions induced in the unique perfect Bayesian equilibrium do not always satisfy ex-post efficiency. Once we introduce explicit communication into the model, however, there exists a truth-telling perfect Bayesian equilibrium, even when the conflict of interest isarbitrarily large. The truth-telling equilibrium outcome is ex-ante Pareto superior to that ofseveral dispute-resolution schemes studied in the framework of Crawford and Sobel (1982).The third chapter, "Contests with a stochastic number of players," studies the Tullock's(1980) n-player contest where each player has an independent probability p in [0,1] to participate. A unique symmetric equilibrium is found for any n and p and its properties are analyzed. In particular, we show that for a fixed n > 2 the individual equilibrium spending is non-monotonic whereas the total equilibrium spending is monotonically increasing in p and n. We also show that the ex-post over-dissipation is a natural feature of the equilibrium in our model.


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Item Type: University of Pittsburgh ETD
Status: Unpublished
CreatorsEmailPitt UsernameORCID
Lim, Wooyoungwol1@pitt.eduWOL1
ETD Committee:
TitleMemberEmail AddressPitt UsernameORCID
Committee ChairBlume, Andreasablume@pitt.eduABLUME
Committee MemberMatros, Alexanderalm75@pitt.eduALM75
Committee MemberLiang,
Committee MemberBoard, Oliver Jojboard@pitt.eduOJBOARD
Date: 21 June 2010
Date Type: Completion
Defense Date: 16 March 2010
Approval Date: 21 June 2010
Submission Date: 20 April 2010
Access Restriction: No restriction; Release the ETD for access worldwide immediately.
Institution: University of Pittsburgh
Schools and Programs: Dietrich School of Arts and Sciences > Economics
Degree: PhD - Doctor of Philosophy
Thesis Type: Doctoral Dissertation
Refereed: Yes
Uncontrolled Keywords: Bargaining; Cheap Talk; Contests; Decision-rights; Information Transmission; Rent-seeking.
Other ID:, etd-04202010-143023
Date Deposited: 10 Nov 2011 19:39
Last Modified: 15 Nov 2016 13:41


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