arXiv subjects

Zongwei Lu

Publications and source records attributed to Zongwei Lu.

2 recordsLinked to original sources

arXiv2021

Peace Through Side Payments

We study strategic bargaining for peaceful settlement before conflict escalates into war, comparing two protocols: offering a take-it-or-leave-it side payment versus requesting one. Unlike in mediation models, the proposer here can signal private information and influence the opponent's beliefs by varying the payment proposal, which renders the prospect of peace tenuous. In the bribing model, peace can be implemented through a continuum of bribes but cannot be secured. Conversely, in the requesting model, peace security is possible, yet it can only be sustained through a single, specific request.

econ.TH↗

arXiv2021

Perfect bidder collusion through bribe and request

We study collusion in a second-price auction with two bidders in a dynamic environment. One bidder can make a take-it-or-leave-it collusion proposal, which consists of both an offer and a request of bribes, to the opponent. We show that there always exists a robust equilibrium in which the collusion success probability is one. In the equilibrium, for each type of initiator the expected payoff is generally higher than the counterpart in any robust equilibria of the single-option model (Esö and Schummer (2004)) and any other separating equilibria in our model.

econ.TH↗