Abstract: The literature on informationally robust predictions has focused mostly on soft information. In a stylized adverse selection model, we show that hard information enables trade, even when the unique equilibrium outcome without it is no-trade.

Abstract: Bilateral bargaining is often facilitated by an intermediary. In many settings, however, the intermediary is biased---sharing interests with one of the negotiating parties---and lacks both commitment and enforcement power. This paper examines how such a biased intermediary affects bargaining outcomes. I consider a stylized bilateral trade framework and compare two bargaining games: a seller-offer bargaining game, in which the seller proposes a price, and a mediated bargaining game, in which the intermediary proposes a price and traders pay her commissions. By focusing on the set of communication equilibria in both games, I characterize the bounds on expected social surplus achievable in equilibrium when the players are allowed to engage in general preplay and intraplay communication. I show that when the commission cost is sufficiently small, the mediated bargaining game can yield a higher expected social surplus than the seller-offer bargaining game in the second-best scenario. This result provides a rationale for the widespread use of intermediaries in bargaining, even when their bias is common knowledge.