Thomas A. Rhoads, Jason F. Shogren
Abstract
The letter explores how transaction costs affect the efficiency and rationality of Coasian bargaining. Efficiency remained relatively robust with low transaction costs, but was significantly reduced with high transaction costs. A cheap talk protocol increased efficiency. Rationality was dominated by constrained self-interest.
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The letter explores how transaction costs affect the efficiency and rationality of Coasian bargaining. Efficiency remained relatively robust with low transaction costs, but was significantly reduced with high transaction costs. A cheap talk protocol increased efficiency. Rationality was dominated by constrained self-interest.
Key concepts: Coase theorem, Transaction cost, Rationality, Microeconomics, Economics, Database transaction, Computer science, Law