Bilateral trading with contingent contracts

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)

    Abstract

    We study the bilateral trading problem under private information. We characterize the range of possible mechanisms which satisfy ex-post efficiency, incentive compatibility, individual rationality, and budget balance. In particular, we show that the famous Myerson–Satterthwaite impossibility result no longer holds when contingent contracts are allowed.

    Original languageEnglish
    Pages (from-to)445-461
    Number of pages17
    JournalInternational Journal of Game Theory
    Volume49
    Issue number2
    DOIs
    Publication statusPublished - 2020 Jun 1

    Bibliographical note

    Funding Information:
    I thank the referees and an associate editor for invaluable comments and suggestions.

    Publisher Copyright:
    © 2019, Springer-Verlag GmbH Germany, part of Springer Nature.

    Copyright:
    Copyright 2020 Elsevier B.V., All rights reserved.

    Keywords

    • Bilateral trading
    • Contingent contracts
    • Ex-post efficiency
    • Linear contracts
    • Royalty contracts

    ASJC Scopus subject areas

    • Statistics and Probability
    • Mathematics (miscellaneous)
    • Social Sciences (miscellaneous)
    • Economics and Econometrics
    • Statistics, Probability and Uncertainty

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