Advances in Information Economics
Paper Session
Sunday, Jan. 3, 2027 8:00 AM - 10:00 AM (EST)
- Chair: Boli Xu, University of Iowa
The Cherry-Picking Trap: How Selection Undermines Trust
Abstract
When a better-informed proposer selects a policy to put before a responder, the responder should not take the proposal at face value but ask why it was chosen. We model how this inference can undermine trust even when interests are broadly aligned. A proposer privately observes a basket of feasible proposals and selects one to put forward; a responder who may lack the expertise to evaluate it, decides whether to approve. A large basket makes Pareto improvements more likely but also gives the proposer greater scope to cherry-pick a proposal that favors him at the responder's expense. We characterize the unique equilibrium: mutually beneficial policies are often put forward and yet the responder rationally rejects them. Flexibility that should enable agreement instead breeds distrust.Reputational Bargaining and Spying
Abstract
We study how private spying opportunities affect bargaining dynamics and outcomes. In a continuous-time war-of-attrition model, bargainers can invest to learn whether the opponent is committed to the claimed demand. The prospect of private learning changes behavior even before information arrives by raising the value of waiting and altering how delay is interpreted. We solve the one-sided spying game in closed form and show that bilateral spying endogenously becomes one-sided in equilibrium. As commitment probabilities vanish, bargaining ends almost immediately, and the player who can learn captures essentially the entire surplus. Hence, private learning restores a Coase-like force inside a two-sided reputational bargaining environment.Going Public: Communication in Collective Decisions
Abstract
A principal and $n ge 2$ agents can launch a project if the principal proposes it and at least k agents accept. Their individual payoffs from the project depend on an ex ante unknown state. The principal can conduct a test to learn about the state and then communicate her findings to the agents via cheap talk. This paper focuses on comparing two communication regimes: public and private messaging. We show that public messaging is weakly dominant: any outcome implementable under private messaging can also be implemented under public messaging. Moreover, in a canonical environment with linear payoffs, we characterize the principal's optimal test in each regime and show that public messaging can be strictly dominant if and only if there exist two agents who are the principal's conflicting allies.JEL Classifications
- D8 - Information, Knowledge, and Uncertainty
- C7 - Game Theory and Bargaining Theory