DISPUTE SETTLEMENT WITH SECOND-ORDER UNCERTAINTY

• 成果类型: Article
• 署名作者: Beshkar, Mostafa; Park, Jee-Hyeong
• 署名单位: Indiana University System; Indiana University Bloomington; Seoul National University (SNU)
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12519
• 发表日期: 2021
• 页码: 1433-1452
• 关键词: Informed principal; TRADE; LITIGATION

摘要

The literature on pretrial dispute settlement has focused on the effect of first-order uncertainty on bargaining, while assuming common knowledge about higher-order beliefs. We study the effect of higher-order uncertainty and show that the existence of such uncertainty improves the efficiency of settlement bargaining by expanding the set of strategies implementable in the equilibrium. We introduce uncertainty about higher-order beliefs by assuming that one player privately observes an imperfect signal of the other player's type. We show that such signals could improve the efficiency only if they are privately observed: The signal's informational value disappears if it is publicly observable.