DP16326 Bargaining over Treatment Choice under Disagreement

Author(s): Nabil I. Al-Najjar, Robert J. Gary-Bobo
Publication Date: July 2021
Programme Areas: Public Economics, Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16326

A group of experts with different prior beliefs must choose a treatment. A dataset is made public and leads to revisions of beliefs. We propose a model where the experts' disagreements are resolved through bargaining, using the Nash bargaining solution. Experts bargain after disclosure of the dataset. Bargaining may lead to an inefficient use of information in a strong sense: experts receive a lower payoff in every state, and for any prior belief (i.e., inadmissibility). Bargaining exhibits under-reaction to information as compared to the normative solution in which experts bargain ex ante on the procedure used to exploit the data.