Robust trading mechanisms with budget surplus and partial trade
- 19 Downloads
In a bilateral bargaining problem with private values, Hagerty and Rogerson (J Econ Theory 42(1):94–107, 1987) showed that essentially all dominant strategy incentive compatible, ex post individually rational, and budget balanced mechanisms are posted-price mechanisms, where a price is drawn from a distribution, and trade occurs if both players benefit from trading at this price. In this paper, we demonstrate a feasible bargaining mechanism that yields more ex ante gains from trade than any posted-price (budget balanced) mechanism.
KeywordsDominant strategy implementation Vickrey–Clarke–Groves mechanisms Bilateral bargaining Budget balancedness
JEL ClassificationC72 C78 D82
- Čopič, J., Ponsatí, C.: Ex-post constrained-efficient bilateral trade with risk-averse traders. Working paper, UCLA (2008)Google Scholar
- De Clippel, G., Naroditskiy, V., Polukarov, M., Greenwald, A., Jennings, N.R.: Destroy to save. In: Proceedings of the 10th ACM conference on Electronic Commerce (2009)Google Scholar
- Roughgarden, T., Sundararajan, M.: New trade-offs in cost-sharing mechanisms. In: Proceedings of the thirty-eighth annual ACM symposium on Theory of Computing (2006)Google Scholar