TY - JOUR
T1 - Implementable and ex-post IR rules in bilateral trading with discrete values
AU - Flesch, Janos
AU - Schröder, Marc
AU - Vermeulen, Dries
N1 - No data used
PY - 2016/11
Y1 - 2016/11
N2 - We study bargaining problems between one buyer and one seller for a single object when each set of valuations is finite. We derive a necessary and sufficient condition for interim-implementable trading rules, analogous to the result in Myerson and Satterthwaite (1983), and a necessary condition for mechanisms that are free from ex post regret on and off equilibrium path. Based on these two theorems, our contribution is three-fold. First, we illustrate the results by means of three examples. Second, in contrast to the continuous model, there always exist strictly positive probability mass functions such that ex post efficiency and interim-implementability is feasible. Third, we show the difference between interim- and ex post-implementation. In the class of threshold trading rules, interim-implementation only precludes inefficient trade, while ex post-implementation is equivalent to posted price implementation. (C) 2016 Elsevier B.V. All rights reserved.
AB - We study bargaining problems between one buyer and one seller for a single object when each set of valuations is finite. We derive a necessary and sufficient condition for interim-implementable trading rules, analogous to the result in Myerson and Satterthwaite (1983), and a necessary condition for mechanisms that are free from ex post regret on and off equilibrium path. Based on these two theorems, our contribution is three-fold. First, we illustrate the results by means of three examples. Second, in contrast to the continuous model, there always exist strictly positive probability mass functions such that ex post efficiency and interim-implementability is feasible. Third, we show the difference between interim- and ex post-implementation. In the class of threshold trading rules, interim-implementation only precludes inefficient trade, while ex post-implementation is equivalent to posted price implementation. (C) 2016 Elsevier B.V. All rights reserved.
KW - EFFICIENT MECHANISMS
KW - AUCTIONS
KW - DESIGN
U2 - 10.1016/j.mathsocsci.2016.08.003
DO - 10.1016/j.mathsocsci.2016.08.003
M3 - Article
SN - 0165-4896
VL - 84
SP - 68
EP - 75
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
ER -