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Partnership dissolution and proprietary information

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  • Jianpei Li

    ()

  • Yi Xue

    ()

  • Weixing Wu

    ()

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    Abstract

    This article analyzes simple rules for dissolving a common value partnership in which one partner holds proprietary information. The winner’s bid auction and the loser’s bid auction are payoff equivalent and both favor the informed partner. If it is verifiable which partner is informed, the cake-cutting mechanism (CCM) generates a “fair” allocation by making the informed partner the proposer. If that information is not verifiable and the identity of the proposer is determined through a lottery, the CCM favors the informed partner, too. Moreover, CCM is fairer than the auctions for common distributions of the asset value. Copyright Springer-Verlag 2013

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    File URL: http://hdl.handle.net/10.1007/s00355-011-0610-x
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    Bibliographic Info

    Article provided by Springer in its journal Social Choice and Welfare.

    Volume (Year): 40 (2013)
    Issue (Month): 2 (February)
    Pages: 495-527

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    Handle: RePEc:spr:sochwe:v:40:y:2013:i:2:p:495-527

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    1. James Andreoni & Yeon-Koo Che & Jinwoo Kim, 2006. "Asymmetric information about rivals' types in standard auctions: An experiment," Discussion Papers 0506-27, Columbia University, Department of Economics.
    2. Stefano Galavotti & Nozomu Muto & Daisuke Oyama, 2011. "On efficient partnership dissolution under ex post individual rationality," Economic Theory, Springer, vol. 48(1), pages 87-123, September.
    3. Schweinzer, Paul, 2010. "Sequential bargaining with common values," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 109-121, January.
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    14. Che, Yeon-Koo & Hendershott, Terrence, 2008. "How to divide the possession of a football?," Economics Letters, Elsevier, vol. 99(3), pages 561-565, June.
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    16. Hendricks, Kenneth & Porter, Robert H, 1988. "An Empirical Study of an Auction with Asymmetric Information," American Economic Review, American Economic Association, vol. 78(5), pages 865-83, December.
    17. Maria Angeles de Frutos & Thomas Kittsteiner, 2004. "Efficient partnership dissolution under buy/sell clauses," Bonn Econ Discussion Papers bgse1_2004, University of Bonn, Germany, revised Jul 2004.
    18. Ornelas, Emanuel & Turner, John L., 2007. "Efficient dissolution of partnerships and the structure of control," Games and Economic Behavior, Elsevier, vol. 60(1), pages 187-199, July.
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