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Internet Trading Mechanisms And Rational Expectations

Author

Listed:
  • Sergei Severinov
  • Michael Peters

Abstract

This paper studies an internet trading mechanism similar to the one described in Peters and Severinov (2001) in a market where traders values are interdependent. It is shown that under reasonable conditions this mechanism has a perfect Bayesian equilibrium which supports allocations that converge to rational expectations equilibrium allocations. In particular, this equilibrium supports allocations that are ex post efficient. We show how to construct the rational expectations equilibrium from the market outcome. The mechanism is also compared to a double auction

Suggested Citation

  • Sergei Severinov & Michael Peters, 2004. "Internet Trading Mechanisms And Rational Expectations," Econometric Society 2004 North American Winter Meetings 551, Econometric Society.
  • Handle: RePEc:ecm:nawm04:551
    as

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    File URL: http://www.economics.utoronto.ca/peters/papers/information_revelation.pdf
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    References listed on IDEAS

    as
    1. Peters, Michael & Severinov, Sergei, 1997. "Competition among Sellers Who Offer Auctions Instead of Prices," Journal of Economic Theory, Elsevier, vol. 75(1), pages 141-179, July.
    2. Roth,Alvin E. & Sotomayor,Marilda A. Oliveira, 1992. "Two-Sided Matching," Cambridge Books, Cambridge University Press, number 9780521437882.
    3. Harold L. Cole & George J. Mailath & Andrew Postlewaite, "undated". "Efficient Non-Contractible Investments," Penn CARESS Working Papers 08d6793d32cab8f6e1f46dac0, Penn Economics Department.
    4. Harold L. Cole & George J. Mailath & Andrew Postlewaite, "undated". "Efficient Non-Contractible Investments in a Finite Economy," Penn CARESS Working Papers 452f3f87415f37596752b3995, Penn Economics Department.
    5. Piero Gottardi & Roberto Serrano, 2005. "Market Power And Information Revelation In Dynamic Trading," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1279-1317, December.
    6. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
    7. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
    8. Rustichini, Aldo & Satterthwaite, Mark A & Williams, Steven R, 1994. "Convergence to Efficiency in a Simple Market with Incomplete Information," Econometrica, Econometric Society, vol. 62(5), pages 1041-1063, September.
    9. Asher Wolinsky, 1988. "Dynamic Markets with Competitive Bidding," Review of Economic Studies, Oxford University Press, vol. 55(1), pages 71-84.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mark Satterthwaite & Artyom Shneyerov, 2003. "Convergence of a Dynamic Matching and Bargaining Market with Two-sided Incomplete Information to Perfect Competition," Discussion Papers 1384, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

    More about this item

    Keywords

    internet auctions; rational expectations;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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