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Ready to trade? On budget-balanced efficient trade with uncertain arrival

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  • Garrett, Daniel F.

Abstract

This paper studies the design of efficient mechanisms for repeated bilateral trade in settings where (i) traders' values and costs evolve randomly with time, and (ii) the traders become ready and available to participate in the mechanism at random times. Under a weak condition, analogous to the non-overlapping supports condition of Myerson and Satterthwaite (1983), efficient trade is only feasible if the mechanism runs an expected budget deficit. The smallest such deficit is attainable by a sequence of static mechanisms.

Suggested Citation

  • Garrett, Daniel F., 2023. "Ready to trade? On budget-balanced efficient trade with uncertain arrival," Games and Economic Behavior, Elsevier, vol. 138(C), pages 161-170.
    • Handle: RePEc:eee:gamebe:v:138:y:2023:i:c:p:161-170
    DOI: 10.1016/j.geb.2022.12.007
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    References listed on IDEAS

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    More about this item

    Keywords

    Dynamic mechanism design; Repeated trade; Budget balance; Dynamic arrivals; Participation constraints;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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