Opacity in bargaining over public good provision

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 fall short of the socially desirable level. Compared with unilateral delegation, bilateral delegation is never worse from a welfare perspective.

Contributing with private bundles to public goods

“…Then, taking into account the voluntary 1 To mention a few: Cancer Associations in different countries, MSF international, Greenpeace, World Wildlife Fund,... 2 Recent events highlighting the importance of such contributions are the Brazilian National Museum fire in 2018 or the Notre Dame fire in 2019. 3 Based on this proposal, one also finds models studying voluntary public good provision in different frameworks where information issues play a role (see Barbieri 2023, andLamprecht andThum 2023). 4 They show equilibrium existence, and present a comparative statics study about wealth distributions.…”