Periodic Reporting for period 4 - InfoTrans (Information Transmission in Markets)
Période du rapport: 2025-08-01 au 2026-01-31
This project developed new theoretical tools to study price negotiations in dynamic markets. It examined one of the most fundamental economic problems: bargaining between a seller and a buyer over the price of a good when both parties held private information about their costs or valuations and could postpone agreement over time. In such environments, market outcomes reflected both strategic information transmission and dynamic incentives generated by the option to continue bargaining.
The project addressed a major gap in the literature. Despite the central importance of bargaining with two-sided asymmetric information, theoretical understanding of such environments had remained limited, largely because of the lack of tractable tools for analysing models in which several economic forces interacted simultaneously. On the one hand, signaling incentives could induce both sides to delay agreement in an attempt to secure a larger share of the surplus. On the other hand, Coasian forces tended to put downward pressure on prices over time and to favour efficient trade. The project showed that the interaction of these forces was central to explaining whether trade was efficient, how quickly agreements were reached, and how the gains from trade were distributed.
The overall objective of the project was to provide a systematic analysis of dynamic markets with asymmetric information. A first objective was to develop new stability-based equilibrium concepts and the methodological tools required to make them operational in complex dynamic games. A second objective was to apply these tools to simpler, though still insufficiently understood, environments in order to build intuition, derive robust predictions, and clarify the circumstances under which stability-based equilibrium selection yielded additional economic content. A third objective was to extend the analysis of dynamic pricing by privately informed sellers to a broad class of settings, including markets with independent values, interdependent values, and environments in which traders interacted either once or repeatedly. A final objective was to bring these conceptual and technical advances together to study the project’s central target: dynamic bargaining with two-sided private information, where both parties strategically managed both information disclosure and the timing of agreement.
The project was relevant for a wide range of markets in which negotiations played a central role and information was dispersed or confidential, including real estate, durable goods, intermediate goods, and financial markets. By clarifying how private information and disclosure shaped delay, efficiency, and surplus division, the project provided a framework for assessing the welfare and efficiency implications of privacy and confidentiality policies in dynamic market environments.
The project addressed a major gap in the literature. Despite the central importance of bargaining with two-sided asymmetric information, theoretical understanding of such environments had remained limited, largely because of the lack of tractable tools for analysing models in which several economic forces interacted simultaneously. On the one hand, signaling incentives could induce both sides to delay agreement in an attempt to secure a larger share of the surplus. On the other hand, Coasian forces tended to put downward pressure on prices over time and to favour efficient trade. The project showed that the interaction of these forces was central to explaining whether trade was efficient, how quickly agreements were reached, and how the gains from trade were distributed.
The overall objective of the project was to provide a systematic analysis of dynamic markets with asymmetric information. A first objective was to develop new stability-based equilibrium concepts and the methodological tools required to make them operational in complex dynamic games. A second objective was to apply these tools to simpler, though still insufficiently understood, environments in order to build intuition, derive robust predictions, and clarify the circumstances under which stability-based equilibrium selection yielded additional economic content. A third objective was to extend the analysis of dynamic pricing by privately informed sellers to a broad class of settings, including markets with independent values, interdependent values, and environments in which traders interacted either once or repeatedly. A final objective was to bring these conceptual and technical advances together to study the project’s central target: dynamic bargaining with two-sided private information, where both parties strategically managed both information disclosure and the timing of agreement.
The project was relevant for a wide range of markets in which negotiations played a central role and information was dispersed or confidential, including real estate, durable goods, intermediate goods, and financial markets. By clarifying how private information and disclosure shaped delay, efficiency, and surplus division, the project provided a framework for assessing the welfare and efficiency implications of privacy and confidentiality policies in dynamic market environments.
The project generated a substantial body of research output, with 13 papers published to date. This work fell into three broad strands.
First, the project developed practical tools for analyzing strategically stable behavior in dynamic games with asymmetric information. These contributions made strategic stability operational in complex settings in which it had previously been difficult to apply, and they established new concepts and methods for studying dynamic strategic interaction under incomplete information.
Second, the project produced a series of contributions on dynamic trade and bargaining. These studies advanced the understanding of how prices, delay, and welfare outcomes were shaped when trade took place over time under incomplete information, and they yielded new insights into the mechanisms governing dynamic pricing and negotiation.
Third, the project opened additional closely related research avenues, especially on robust communication in cheap-talk environments, as well as on related questions in information transmission and network settings. These contributions showed that the project’s methodological advances extended beyond bargaining and pricing and could be applied more broadly to strategic environments in which communication and information played a central role.
Beyond the published work, the project also generated a substantial pipeline of further research. At the time of reporting, two additional manuscripts were at an advanced stage of development, one on equilibrium selection in infinite games and another on deadlines and discounting in bargaining. In addition, six complete working papers had already been submitted to journals and were expected to further support and complete the project’s objectives, covering topics such as optimal information transmission, lexicographic tools for stability, equilibrium refinements, self-justifiable outcomes, and applications to entry deterrence.
This work has been presented at numerous seminars and conferences.
First, the project developed practical tools for analyzing strategically stable behavior in dynamic games with asymmetric information. These contributions made strategic stability operational in complex settings in which it had previously been difficult to apply, and they established new concepts and methods for studying dynamic strategic interaction under incomplete information.
Second, the project produced a series of contributions on dynamic trade and bargaining. These studies advanced the understanding of how prices, delay, and welfare outcomes were shaped when trade took place over time under incomplete information, and they yielded new insights into the mechanisms governing dynamic pricing and negotiation.
Third, the project opened additional closely related research avenues, especially on robust communication in cheap-talk environments, as well as on related questions in information transmission and network settings. These contributions showed that the project’s methodological advances extended beyond bargaining and pricing and could be applied more broadly to strategic environments in which communication and information played a central role.
Beyond the published work, the project also generated a substantial pipeline of further research. At the time of reporting, two additional manuscripts were at an advanced stage of development, one on equilibrium selection in infinite games and another on deadlines and discounting in bargaining. In addition, six complete working papers had already been submitted to journals and were expected to further support and complete the project’s objectives, covering topics such as optimal information transmission, lexicographic tools for stability, equilibrium refinements, self-justifiable outcomes, and applications to entry deterrence.
This work has been presented at numerous seminars and conferences.
The project delivered clear progress beyond the state of the art, both in methodology and in its applications to markets with asymmetric information. Although the work evolved in a different sequence than originally planned, with greater emphasis on tool development, this shift proved highly productive: the stability-based methods developed during the project generated well-received publications and provided a solid foundation for the project’s core questions on pricing and bargaining.
A first major advance was the development of a practical toolkit for strategically stable analysis in extensive-form games. The project introduced new concepts and characterizations that made stability-based equilibrium selection workable in complex dynamic environments, including sequentially stable outcomes, new approaches to consistent assessments, and refinements for signaling and other asymmetric-information settings. In parallel, new mathematical infrastructure, especially lexicographic numbers, linked extensive-form equilibrium analysis to deeper mathematical theory and made the approach more tractable and broadly applicable.
A second major advance was the production of new results on dynamic trade, pricing, and bargaining, which yielded sharper predictions about prices and welfare when information was incomplete and evolved over time, including in dynamic bargaining, repeated trade with imperfect information, environments with binary private information, and settings with random price discounts. These contributions identified mechanisms shaping pricing dynamics that had previously not been well understood.
A third contribution consisted of closely related spin-off work, most notably on robust communication, which showed that stability-based reasoning could have strong selection power even in cheap-talk models, an approach that had long been viewed as infeasible. This strand also included related work on communication and information acquisition, as well as policy-relevant insights on privacy regulation.
The project also established a strong basis for further consolidation of the framework through its broader research pipeline. At the time of completion, this pipeline included two revise-and-resubmit papers and six submitted working papers. Most importantly, the Phase 1 toolkit had become sufficiently developed to be applied to the project’s central target, namely pricing in bargaining with asymmetric and interdependent information, thereby laying the groundwork for sharper and more robust predictions and for policy-relevant implications.
A first major advance was the development of a practical toolkit for strategically stable analysis in extensive-form games. The project introduced new concepts and characterizations that made stability-based equilibrium selection workable in complex dynamic environments, including sequentially stable outcomes, new approaches to consistent assessments, and refinements for signaling and other asymmetric-information settings. In parallel, new mathematical infrastructure, especially lexicographic numbers, linked extensive-form equilibrium analysis to deeper mathematical theory and made the approach more tractable and broadly applicable.
A second major advance was the production of new results on dynamic trade, pricing, and bargaining, which yielded sharper predictions about prices and welfare when information was incomplete and evolved over time, including in dynamic bargaining, repeated trade with imperfect information, environments with binary private information, and settings with random price discounts. These contributions identified mechanisms shaping pricing dynamics that had previously not been well understood.
A third contribution consisted of closely related spin-off work, most notably on robust communication, which showed that stability-based reasoning could have strong selection power even in cheap-talk models, an approach that had long been viewed as infeasible. This strand also included related work on communication and information acquisition, as well as policy-relevant insights on privacy regulation.
The project also established a strong basis for further consolidation of the framework through its broader research pipeline. At the time of completion, this pipeline included two revise-and-resubmit papers and six submitted working papers. Most importantly, the Phase 1 toolkit had become sufficiently developed to be applied to the project’s central target, namely pricing in bargaining with asymmetric and interdependent information, thereby laying the groundwork for sharper and more robust predictions and for policy-relevant implications.