@article{733bcee68f834b4689484b0b6867e852,
title = "Bargaining over bets",
abstract = "When two agents hold different priors over an unverifiable state of nature, which affects the outcome of a game they are about to play, they have an incentive to bet on the game's outcome. We pose the following question: what are the limits to the agents' ability to realize gains from such speculative bets when their priors are private information? We apply a {"}mechanism design{"} approach to this question. We characterize interim-efficient bets and discuss their implementability in terms of the underlying game's payoff structure. In particular, we show that as the costs of unilaterally manipulating the bet's outcome become more symmetric across states and agents, implementation becomes easier.",
keywords = "Bets, Mechanism design, Non-common priors, Optimism, Pre-game contracts, Speculative trade",
author = "Kfir Eliaz and Ran Spiegler",
note = "Funding Information: We thank the Editor, an Associate Editor and two anonymous referees whose comments helped improve this paper. We also wish to thank Barton Lipman, Eric Maskin, Ady Pauzner, Wolfgang Pesendorfer, Ariel Rubinstein and especially Eddie Dekel, for helpful conversations and comments. The first author acknowledges financial support from NSF Grant No. 0611938, and the second author is grateful for financial support from the US-Israel Binational Science Foundation, Grant No. 2002298.",
year = "2009",
month = may,
doi = "10.1016/j.geb.2008.06.001",
language = "אנגלית",
volume = "66",
pages = "78--97",
journal = "Games and Economic Behavior",
issn = "0899-8256",
publisher = "Academic Press Inc.",
number = "1",
}