I am not so sure the incentives are properly aligned here. Let’s assume I am the seller.
In the extreme case in which I know the highest price accepted by the buyer, I am obviously incentivized to take it as my own limit price.
And I think this generalizes. If:
there is a universally agreed true fair price FAIR_PRICE, like an official market value
the buyer is still filling the form honestly
I know the buyer to have a highest price above FAIR_PRICE + 2
then I can easily get FAIR_PRICE+2
Of course this requires some information on the other negotiator, but I do not see this as unreasonable.
Could you clarify in which situation this is meant to incentivize people to fill the form honestly?
Just in case: I assume that by “best price” you mean “highest price” rather than “estimated fair price”.
If so, I only need to have some information on it to be incentivized to lie. In the example above I only use the information that the buyer is willing to pay two units above the fair price. The kind of example I use doesn’t work if I have no information at all about the other’s best price but that is rare. Realistically, I always have “some” estimation of what the other is willing to pay.
If we take a general Bayesian framework, I have a distribution on the buyer’s best and fair price. It seems to me that most/all nontrivial distributions will incentivize me to lie.
Just in case: I assume that by “best price” you mean “highest price” rather than “estimated fair price”.
No, I mean the price at which that party is indifferent between making the deal and not making the deal.
If we take a general Bayesian framework, I have a distribution on the buyer’s best and fair price. It seems to me that most/all nontrivial distributions will incentivize me to lie.
Yeah, and I’m trying to make that difficult for humans to do.
No, I mean the price at which that party is indifferent between making the deal and not making the deal.
I think that’s the same thing? By “highest price” I meant “the highest price the buyer is willing to pay”. That’s the turning point after which the buyer dislikes the deal and before which the buyer likes the deal.
Yeah, and I’m trying to make that difficult for humans to do.
I understand but I fail to see that this attempt works. It seems to me that in many / most real cases (for which I have a reasonable estimate on the other’s best price) it is in my interst to lie if I know that the other is filling the form honestly. If that is correct, then the “honest meta” is unstable.
The highest price the buyer is willing to pay or the lowest price the seller is willing to sell for, yeah.
I agree it’s not perfect, and might be slightly game-able. But having used it myself I didn’t feel like I had a particularly strong incentive to not input my true price, and I don’t have any better ideas.
I am not so sure the incentives are properly aligned here. Let’s assume I am the seller. In the extreme case in which I know the highest price accepted by the buyer, I am obviously incentivized to take it as my own limit price.
And I think this generalizes. If:
there is a universally agreed true fair price FAIR_PRICE, like an official market value
the buyer is still filling the form honestly
I know the buyer to have a highest price above FAIR_PRICE + 2 then I can easily get FAIR_PRICE+2
Of course this requires some information on the other negotiator, but I do not see this as unreasonable.
Could you clarify in which situation this is meant to incentivize people to fill the form honestly?
The situation where you don’t know the other person’s best price. :)
Just in case: I assume that by “best price” you mean “highest price” rather than “estimated fair price”.
If so, I only need to have some information on it to be incentivized to lie. In the example above I only use the information that the buyer is willing to pay two units above the fair price. The kind of example I use doesn’t work if I have no information at all about the other’s best price but that is rare. Realistically, I always have “some” estimation of what the other is willing to pay.
If we take a general Bayesian framework, I have a distribution on the buyer’s best and fair price. It seems to me that most/all nontrivial distributions will incentivize me to lie.
No, I mean the price at which that party is indifferent between making the deal and not making the deal.
Yeah, and I’m trying to make that difficult for humans to do.
I think that’s the same thing? By “highest price” I meant “the highest price the buyer is willing to pay”. That’s the turning point after which the buyer dislikes the deal and before which the buyer likes the deal.
I understand but I fail to see that this attempt works. It seems to me that in many / most real cases (for which I have a reasonable estimate on the other’s best price) it is in my interst to lie if I know that the other is filling the form honestly. If that is correct, then the “honest meta” is unstable.
The highest price the buyer is willing to pay or the lowest price the seller is willing to sell for, yeah.
I agree it’s not perfect, and might be slightly game-able. But having used it myself I didn’t feel like I had a particularly strong incentive to not input my true price, and I don’t have any better ideas.