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Ex Post Efficiency and Individual Rationality in Incentive Compatible Trading Mechanisms


  • Lundgren, Stefan

    (Research Institute of Industrial Economics (IFN))


This paper concerns the design of a trading mechanism for a group of traders when their valuations of the good are private information and they bargain over who shall consume more than his initial endowment and who shall consume less. It is shown that there generally exists a set of initial endowments of the traded commodity such that it is possible to design a trading mechanism which is incentive compatible, individually rational and ex post efficient.

Suggested Citation

  • Lundgren, Stefan, 1988. "Ex Post Efficiency and Individual Rationality in Incentive Compatible Trading Mechanisms," Working Paper Series 202, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0202

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    References listed on IDEAS

    1. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    2. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    3. Kalyan Chatterjee, 1982. "Incentive Compatibility in Bargaining Under Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 717-726.
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    More about this item


    Efficient trading; mechanism design.;

    JEL classification:

    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy


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