The Sealed-Bid Mechanism for Bargaining with Incomplete Information

The study of structured bargaining procedures arises naturally in the context of the so-called 'transfer price problem,' i.e., the problem of designing mechanisms for the pricing of goods and services that are transferred from one division of a firm to another. A typical feature of this situation is that the relevant data, e.g., the costs to the supplier division and the benefits to the customer division, are not equally well known to the participants.