Economics research seminar: Selcuk Ozyurt, York University

Selcuk Ozyurt, York University

Topic

Mediating Conflict Negotiations: An Information Design Approach 

abstract

The seminal work by Myerson and Satterthwaite (1983) highlights the difficulties in reaching an efficient settlement in a negotiation when one party possesses information that the other does not. This insight has been reiterated by various researchers across diverse contexts. This paper explores a well-known bargaining framework where two parties disagree over the distribution of a surplus known to both. The parties have two options: find a mutually acceptable agreement to resolve the dispute or resort to costly means, such as litigation, strikes, and warfare, as an outside option. Our paper brings two novel contributions to this well-known bargaining framework. First, we adopt an information design perspective and uncover peaceful resolutions across all possible information structures. Second, we introduce the use of inaccurate signals, not only for negotiators but also for the mediator. This opens up a plethora of new problems to studying this well-known bargaining framework, with mechanism design, information design, and Bayesian persuasion approaches becoming special cases.