If both parties have perfect information about all economic facts of the negotiation:
A) the parties should reach an efficient agreement.
B) the parties are sure to reach an equitable agreement.
C) any mutually-beneficial profit split can be supported as an efficient outcome.
D) a 50-50 profit split is the sole equilibrium outcome.
E) a price offered by one party is most likely to fall beyond the zone of agreement.

Question

Quizplus · Accepted Answer

Perfect information means that both parties have all the relevant information needed to make a decision. In this case, the parties should be able to reach an agreement that is efficient, meaning that it maximizes the joint gains of both parties. Without any information asymmetries or incomplete information, there are no roadblocks or barriers to negotiation, and the parties can work together to achieve the best possible outcome.

If Both Parties Have Perfect Information About All Economic Facts