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Robert J. GARY-BOBO (CREST) – “Bargaining over Treatment Choice under Disagreement”
April 16, 12:15 pm - 1:15 pm
The Microeconometrics Seminar: Every Tuesday at 12:15 pm.
Time: 12:15 pm – 1:15 pm
Date: 16th of April 2019
Place: Room 3001.
Robert J. GARY-BOBO (CREST) – “Bargaining over Treatment Choice under Disagreement”, joint work with Nabil I. Al-Najjar (Northwestern University).
Abstract: A group of experts with different prior beliefs must make a collective decision over the choice of a treatment or policy. We propose a model where such disagreements are resolved through bargaining. We show that, when the outcome is determined according to the Nash bargaining solution, the collective decision is made as if a planner maximized expected utility with respect to a “compromise belief” that places greater weight on the more pessimistic experts. In interesting classes of environments, bargaining leads to an inefficient use of information in a strong sense: experts receive a lower payoff in every state, and thus for any prior belief. This inefficiency takes the form of under-reaction to information. We connect these findings to speculative betting and to the admissibility of statistical decision procedures.
Laurent Davezies (CREST), Benoit Schmutz (CREST), Arne Uhlendorff (CREST) & Lucas Girard (CREST)
food provided, no registration