Power and the Privilege of Clarity: An Analysis of Bargaining Power and Information Transmission

Tinbergen Institute Discussion Paper 11-055/1

33 Pages Posted: 25 Mar 2011 Last revised: 27 Nov 2012

See all articles by Adrian de Groot Ruiz

Adrian de Groot Ruiz

University of Amsterdam - Faculty of Economics and Business (FEB)

T. J. S. Offerman

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Date Written: July 25, 2012

Abstract

People in inferior bargaining positions are often vaguer when they express their preferences. In this paper, we explain how power shapes clarity of communication. We analyze information transmission in a cheap talk bargaining game between an informed Sender and an uninformed Receiver.

Our main result is that the maximum amount of information transmission is increasing in the relative power of the Sender. As a result, clarity is a privilege of the powerful. In our model, only Senders whose preferences are closely aligned with the Receiver can completely reveal their information in equilibrium. We discuss some testable implications of our model.

Keywords: Cheap Talk, Clarity, Power, Bargaining, Information Transmission

JEL Classification: C72, C91, D82, D83

Suggested Citation

de Groot Ruiz, Adrian and Offerman, T. J. S. and Onderstal, Sander, Power and the Privilege of Clarity: An Analysis of Bargaining Power and Information Transmission (July 25, 2012). Tinbergen Institute Discussion Paper 11-055/1, Available at SSRN: https://ssrn.com/abstract=1788876 or http://dx.doi.org/10.2139/ssrn.1788876

Adrian De Groot Ruiz (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

T. J. S. Offerman

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Sander Onderstal

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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