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Optimal robust bilateral trade: Risk neutrality

Author

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  • Čopič, Jernej
  • Ponsatí, Clara

Abstract

A risk neutral seller and buyer with private information bargain over an indivisible item. We prove that optimal robust bilateral trade mechanisms are payoff equivalent to non-wasteful randomized posted prices.

Suggested Citation

  • Čopič, Jernej & Ponsatí, Clara, 2016. "Optimal robust bilateral trade: Risk neutrality," Journal of Economic Theory, Elsevier, vol. 163(C), pages 276-287.
  • Handle: RePEc:eee:jetheo:v:163:y:2016:i:c:p:276-287
    DOI: 10.1016/j.jet.2015.11.008
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    References listed on IDEAS

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    1. Greg Kaplan & Guido Menzio, 2015. "The Morphology Of Price Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 1165-1206, November.
    2. Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-1819, November.
    3. Ledyard, John O., 1978. "Incentive compatibility and incomplete information," Journal of Economic Theory, Elsevier, vol. 18(1), pages 171-189, June.
    4. Dirk Bergemann & Stephen Morris, 2005. "Robust Mechanism Design," Econometrica, Econometric Society, vol. 73(6), pages 1771-1813, November.
    5. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    6. Barbera, Salvador & Jackson, Matthew O, 1995. "Strategy-Proof Exchange," Econometrica, Econometric Society, vol. 63(1), pages 51-87, January.
    7. repec:wsi:wschap:9789814374590_0012 is not listed on IDEAS
    8. Dirk Bergemann & Karl H. Schlag, 2012. "Pricing Without Priors," World Scientific Book Chapters,in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 12, pages 405-415 World Scientific Publishing Co. Pte. Ltd..
    9. Tilman Borgers & Doug Smith, 2012. "Robustly Ranking Mechanisms," American Economic Review, American Economic Association, vol. 102(3), pages 325-329, May.
    10. Hagerty, Kathleen M. & Rogerson, William P., 1987. "Robust trading mechanisms," Journal of Economic Theory, Elsevier, vol. 42(1), pages 94-107, June.
    11. Jernej Copic & Clara Ponsatí, 2008. "Robust Bilateral Trade and Mediated Bargaining," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 570-580, 04-05.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Bilateral trade; Incomplete information; Mechanism design; Robustness; Efficiency;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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