Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263801 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9871
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents, whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will, however, fall short of the socially desirable level. Compared to unilateral delegation, bilateral delegation is never worse from a welfare perspective.
Subjects: 
public good provision
transparency
opacity
bargaining
incomplete information
delegation
JEL: 
C78
H40
Document Type: 
Working Paper
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