Division of the Humanities and Social Sciences California Institute of Technology Pasadena, California 91125 an Experimental Study of the Effect of Private Information in the Coase Theorem
نویسندگان
چکیده
This paper investigates, in an experimental setting, the eeect of private information on the Coase theorem's predictions of eeciency and allocative neutrality. For a two-person bargaining game, we nd signiicantly more inef-ciency and allocative asymmetry in the case of private information compared with the case of complete information. We also nd substantial bargaining breakdown, which is not predicted by the Coase theorem. For the case of private information, the Coase theorem does not predict as well as a generalized version of the Myerson-Satterthwaite theorem, which predicts ineeciency, al-locative non-neutrality in the direction of the disagreement point, and some bargaining breakdown. The nancial support of the National Science Foundation (Grant #SBR-9223701) is gratefully acknowledged. We thank Eugene Grayver for writing the computer programs to run the experiments, and we thank Tony Lancaster and Pedro Gozalo for helpful comments.
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