The Value of Information in Negotiations with Incomplete Information

The paper considers bilateral negotiations between a buyer agent and a seller agent, where incomplete information exists on the reservation price of both agents. We analyzed a symmetrical negotiation model in which delay is the only signalling device. We determined the price an agent will be willing to pay for information on the other agent´s reservation price at the beginning of the negotiation process in different situations. We also examined whether the purchase of such information was at all useful in two cases: either when both agents buy information on each other (simultaneously, or in a consecutive manner), or when the information is only available to one of the agents. We observed the effects of various parameters on the value of information and on the final outcome of the negotiation.