Title: Cheap Talk in Multi-Product Bargaining
Abstract: I study a game in which a buyer and a seller bargain over multiple products. The buyer has private valuations over the seller’s product range, and can communicate these through cheap-talk messages. In the benchmark model a fully revealing, welfare-maximizing equilibrium exists. However, a well-known refinement selects a non-empty set of partially informative equilibria, which I characterize fully. In particular, the set contains the ex-ante buyer optimal equilibrium. These results hold for a broad class of preferences, and rest on a natural trade-off faced by the buyer – reveal his type in order to secure his preferred good, or hide his type in order to secure a better price. As goods become less substitutable, the buyer reveals more information, whilst his share of the surplus changes non-monotonically.