Abstract
We modify the dynamic pivot mechanism of Bergemann and Välimäki (Econometrica, 2010) in such a way that lump-sum fees are collected from the players. We show that the modified mechanism satisfies ex-ante budget balance as well as ex-post efficiency, periodic ex-post incentive compatibility, and periodic ex-post individual rationality, as long as the Markov chain representing the evolution of players' private information is irreducible and aperiodic and players are sufficiently patient. We also show that the diverse preference assumption of Bergemann and Välimäki may preclude budget balance.
Original language | English |
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Pages (from-to) | 206-213 |
Number of pages | 8 |
Journal | Games and Economic Behavior |
Volume | 94 |
DOIs | |
Publication status | Published - 2015 Nov 1 |
Bibliographical note
Publisher Copyright:© 2015 Elsevier Inc.
Keywords
- Bilateral trading
- Budget balance
- Dynamic mechanism design
- The dynamic pivot mechanism
- VCG mechanism
ASJC Scopus subject areas
- Finance
- Economics and Econometrics