Robust Trading Mechanisms with Budget Surplus and Partial Trade
نویسندگان
چکیده
In a bilateral bargaining problem with private values, Hagerty and Rogerson (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. We relax budget balancedness to feasibility, and demonstrate that allowing a budget surplus can increase expected gains from trade. Our example demonstrates that when searching for the optimal bargaining mechanism, we cannot generally limit our attention to budget-balanced mechanisms.
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