IDEAS home Printed from https://ideas.repec.org/p/vnm/wpaper/161.html
   My bibliography  Save this paper

On Efficient Trading Mechanisms with Ex-Post Individually Rational Traders

Author

Listed:
  • Stefano Galavotti

    (Department of Applied Mathematics, University of Venice)

Abstract

This 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.

Suggested Citation

  • Stefano Galavotti, 2008. "On Efficient Trading Mechanisms with Ex-Post Individually Rational Traders," Working Papers 161, Department of Applied Mathematics, Università Ca' Foscari Venezia.
    • Handle: RePEc:vnm:wpaper:161
    as

    Download full text from publisher

    File URL: http://virgo.unive.it/wpideas/storage/2008wp161.pdf
    File Function: First version, 2008
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    2. Georgia Kosmopoulou, 1999. "Payoff equivalence between Bayesian and ex post individually rational dominant strategy mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(1), pages 229-237.
    3. Mookherjee, Dilip & Reichelstein, Stefan, 1992. "Dominant strategy implementation of Bayesian incentive compatible allocation rules," Journal of Economic Theory, Elsevier, vol. 56(2), pages 378-399, April.
    4. Steven R. Williams & Georgia Kosmopoulou, 1998. "The robustness of the independent private value model in Bayesian mechanism design," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 393-421.
    5. Makowski Louis & Mezzetti Claudio, 1994. "Bayesian and Weakly Robust First Best Mechanisms: Characterizations," Journal of Economic Theory, Elsevier, vol. 64(2), pages 500-519, December.
    6. Hagerty, Kathleen M. & Rogerson, William P., 1987. "Robust trading mechanisms," Journal of Economic Theory, Elsevier, vol. 42(1), pages 94-107, June.
    7. Gresik, Thomas A., 1991. "Ex ante efficient, ex post individually rational trade," Journal of Economic Theory, Elsevier, vol. 53(1), pages 131-145, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Choi, Jaewon & Kim, Taesung, 1999. "A Nonparametric, Efficient Public Good Decision Mechanism: Undominated Bayesian Implementation," Games and Economic Behavior, Elsevier, vol. 27(1), pages 64-85, April.
    2. Schweizer, Urs, 2006. "Universal possibility and impossibility results," Games and Economic Behavior, Elsevier, vol. 57(1), pages 73-85, October.
    3. Saran, Rene, 2011. "Bilateral trading with naive traders," Games and Economic Behavior, Elsevier, vol. 72(2), pages 544-557, June.
    4. Crawford, Vincent P., 2021. "Efficient mechanisms for level-k bilateral trading," Games and Economic Behavior, Elsevier, vol. 127(C), pages 80-101.
    5. Olivier Compte & Philippe Jehiel, 2009. "Veto Constraint in Mechanism Design: Inefficiency with Correlated Types," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 182-206, February.
    6. Yoon, Kiho, 2008. "The participatory Vickrey-Clarke-Groves mechanism," Journal of Mathematical Economics, Elsevier, vol. 44(3-4), pages 324-336, February.
    7. Pérez-Nievas, Mikel, 2000. "Interim efficient allocation mechanisms," UC3M Working papers. Economics 7220, Universidad Carlos III de Madrid. Departamento de Economía.
    8. Flesch, J. & Schröder, M.J.W. & Vermeulen, A.J., 2013. "The bilateral trade model in a discrete setting," Research Memorandum 025, Maastricht University, Graduate School of Business and Economics (GSBE).
    9. Jesse A. Schwartz & Quan Wen, 2018. "Robust trading mechanisms with budget surplus and partial trade," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(2), pages 201-208, October.
    10. Stefano Galavotti & Nozomu Muto & Daisuke Oyama, 2011. "On efficient partnership dissolution under ex post individual rationality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(1), pages 87-123, September.
    11. Jacob K. Goeree & Alexey Kushnir, 2011. "On the equivalence of Bayesian and dominant strategy implementation in a general class of social choice problems," ECON - Working Papers 021, Department of Economics - University of Zurich.
    12. Vijay Krishna & Motty Perry, 1997. "Efficient Mechanism Design," Game Theory and Information 9703010, University Library of Munich, Germany, revised 28 Apr 1998.
    13. Flesch, János & Schröder, Marc & Vermeulen, Dries, 2016. "Implementable and ex-post IR rules in bilateral trading with discrete values," Mathematical Social Sciences, Elsevier, vol. 84(C), pages 68-75.
    14. Loertscher, Simon & Marx, Leslie M., 2017. "Club good intermediaries," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 430-459.
    15. Kneeland, Terri, 2022. "Mechanism design with level-k types: Theory and an application to bilateral trade," Journal of Economic Theory, Elsevier, vol. 201(C).
    16. Kos, Nenad & Messner, Matthias, 2013. "Extremal incentive compatible transfers," Journal of Economic Theory, Elsevier, vol. 148(1), pages 134-164.
    17. Loertscher, Simon & Mezzetti, Claudio, 2021. "A dominant strategy, double clock auction with estimation-based tatonnement," Theoretical Economics, Econometric Society, vol. 16(3), July.
    18. Laffont, Jean-Jacques & Martimort, David, 2005. "The design of transnational public good mechanisms for developing countries," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 159-196, February.
    19. Gärtner, Dennis L. & Schmutzler, Armin, 2009. "Merger negotiations and ex-post regret," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1636-1664, July.
    20. Vasiliki Skreta & Nicolas Figueroa, 2007. "What to Put on the Table," Levine's Bibliography 843644000000000374, UCLA Department of Economics.

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vnm:wpaper:161. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marco LiCalzi (email available below). General contact details of provider: https://edirc.repec.org/data/dmvenit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.