On Efficient Trading Mechanisms with Ex-Post Individually Rational Traders
AbstractThis paper studies a bilateral trading setting where the two agents are not ex-ante identified, in the sense that each of them may end up being a net buyer or a net seller. We derive a sufficient condition that ensures the existence of an (ex-post) efficient, (ex-post) budget balanced, (interim) incentive compatible trading mechanism that always yields a positive net utility to all agents (ex-post individually rational). This result improves a former existence result based on interim individual rationality showing that the stronger requirement of ex-post individual rationality does not always rule out efficiency.
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Bibliographic InfoPaper provided by Department of Applied Mathematics, Università Ca' Foscari Venezia in its series Working Papers with number 161.
Length: 17 pages
Date of creation: Apr 2008
Date of revision:
Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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