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Decentralised Bilateral Trading in a Market with Incomplete Information

Listed author(s):
  • Kalyan Chatterjee

    (Department of Economics, Pennsylvania State University.)

  • Kaustav Das

    (Department of Economics, University of Exeter)

We study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value. There are two identical buyers and another seller, whose valuation is commonly known to be in between the two possible valuations of the informed seller. We consider two in?nite horizon games, with public and private simultaneous one-sided o¤ers respectively and simultaneous responses. We show that there is a stationary perfect Bayes?equilibrium for both models such that prices in all transactions converge to the same value as the discount factor goes to 1.

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File URL: http://people.exeter.ac.uk/cc371/RePEc/dpapers/DP1313.pdf
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Paper provided by Exeter University, Department of Economics in its series Discussion Papers with number 1313.

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Date of creation: 2013
Handle: RePEc:exe:wpaper:1313
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Web page: http://business-school.exeter.ac.uk/about/departments/economics/

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  1. Galenianos, Manolis & Kircher, Philipp, 2009. "Directed search with multiple job applications," Journal of Economic Theory, Elsevier, vol. 144(2), pages 445-471, March.
  2. Gale,Douglas, 2000. "Strategic Foundations of General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521644105, March.
  3. Gantner, Anita, 2008. "Bargaining, search, and outside options," Games and Economic Behavior, Elsevier, vol. 62(2), pages 417-435, March.
  4. Hendon, Ebbs & Tranaes, Torben, 1991. "Sequential bargaining in a market with one seller and two different buyers," Games and Economic Behavior, Elsevier, vol. 3(4), pages 453-466, November.
  5. Georg Noldeke & Eric van Damme, 1990. "Signalling in a Dynamic Labour Market," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 1-23.
  6. Peters, Michael & Severinov, Sergei, 2006. "Internet auctions with many traders," Journal of Economic Theory, Elsevier, vol. 130(1), pages 220-245, September.
  7. K. G. Binmore & M. J. Herrero, 1988. "Matching and Bargaining in Dynamic Markets," Review of Economic Studies, Oxford University Press, vol. 55(1), pages 17-31.
  8. Gale, Douglas, 1987. "Limit theorems for markets with sequential bargaining," Journal of Economic Theory, Elsevier, vol. 43(1), pages 20-54, October.
  9. Baliga Sandeep & Serrano Roberto, 1995. "Multilateral Bargaining with Imperfect Information," Journal of Economic Theory, Elsevier, vol. 67(2), pages 578-589, December.
  10. Gul, Faruk & Sonnenschein, Hugo & Wilson, Robert, 1986. "Foundations of dynamic monopoly and the coase conjecture," Journal of Economic Theory, Elsevier, vol. 39(1), pages 155-190, June.
  11. Sabourian, Hamid, 2004. "Bargaining and markets: complexity and the competitive outcome," Journal of Economic Theory, Elsevier, vol. 116(2), pages 189-228, June.
  12. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
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