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Search theory, competitive equilibrium, and the Nash bargaining solution

Cho, In-Koo; Matsui, Akihiko - In: Journal of Economic Theory 148 (2013) 4, pp. 1659-1688

We investigate a canonical search-theoretic model without entry. Two agents are randomly matched with a long side being rationed. The matched agents face a pair of randomly drawn non-transferable payoffs, and then choose whether or not to form a partnership subject to a small probability of...

Persistent link: https://www.econbiz.de/10010678871

Asymmetric information in bilateral trade and in markets: An inversion result

Lauermann, Stephan - In: Journal of Economic Theory 147 (2012) 5, pp. 1969-1997

I consider bilateral trade between a seller and a buyer with private valuations. The seller makes a take-it-or-leave-it price offer. If the seller observes the buyerʼs valuation (symmetric information), bilateral trade is trivially efficient. If the seller cannot observe the valuation...

Persistent link: https://www.econbiz.de/10011042932

Crises and liquidity in over-the-counter markets

Lagos, Ricardo; Rocheteau, Guillaume; Weill, Pierre-Olivier - In: Journal of Economic Theory 146 (2011) 6, pp. 2169-2205

We study the efficiency of liquidity provision by dealers and the desirability of policy intervention in over-the-counter (OTC) markets during crises. We emphasizes two OTC frictions: finding counterparties takes time, and trade is bilateral and involves bargaining. We model a crisis as a shock...

Persistent link: https://www.econbiz.de/10011042999

Meeting technologies and optimal trading mechanisms in competitive search markets

Lester, Benjamin; Visschers, Ludo; Wolthoff, Ronald - In: Journal of Economic Theory 155 (2015) C, pp. 1-15

In a market in which sellers compete by posting mechanisms, we study how the properties of the meeting technology affect the mechanism that sellers select. In general, sellers have incentive to use mechanisms that are socially efficient. In our environment, sellers achieve this by posting an...

Persistent link: https://www.econbiz.de/10011189759

When are signals complements or substitutes?

Börgers, Tilman; Hernando-Veciana, Angel; Krähmer, Daniel - In: Journal of Economic Theory 148 (2013) 1, pp. 165-195

The paper introduces a notion of complementarity (substitutability) of two signals which requires that in all decision … characterization which relates complementarity and substitutability to a Blackwell comparison of two auxiliary signals. In a setting … of complementarity and substitutability. We demonstrate how these conditions extend to more general settings. We also …

Persistent link: https://www.econbiz.de/10011042929

Imitating cooperation and the formation of long-term relationships

Schumacher, Heiner - In: Journal of Economic Theory 148 (2013) 1, pp. 409-417

We study the infinitely repeated prisonerʼs dilemma with the option to maintain or to quit relationships. We show that if agents imitate successful strategies infrequently, defection is not dynamically stable and cooperation emerges regardless of the initial distribution of strategies.

Persistent link: https://www.econbiz.de/10011042996

Bargaining and efficiency in networks

Abreu, Dilip; Manea, Mihai - In: Journal of Economic Theory 147 (2012) 1, pp. 43-70

We study an infinite horizon game in which pairs of players connected in a network are randomly matched to bargain over a unit surplus. Players who reach agreement are removed from the network without replacement. The global logic of efficient matchings and the local nature of bargaining, in...

Persistent link: https://www.econbiz.de/10010582590

Community enforcement with observation costs

Awaya, Yu - In: Journal of Economic Theory 154 (2014) C, pp. 173-186

Takahashi (2010) [12] proves a folk theorem in an environment where a continuum of players are randomly matched in each period to play the prisoner's dilemma with a different partner. A key assumption there is that a player can observe her partner's past play without any cost, while she cannot...

Persistent link: https://www.econbiz.de/10011076687

Matching through position auctions

Johnson, T.R. - In: Journal of Economic Theory 148 (2013) 4, pp. 1700-1713

Using a mechanism design framework, we characterize how a profit-maximizing intermediary can design matching markets when each agent is privately informed about his quality as a partner. Sufficient conditions are provided that ensure a version of positive assortative matching (what we call...

Persistent link: https://www.econbiz.de/10010678862

Eliciting information from a committee

Zapechelnyuk, Andriy - In: Journal of Economic Theory 148 (2013) 5, pp. 2049-2067

The paper addresses the mechanism design problem of eliciting truthful information from a committee of informed experts who collude in their information disclosure strategies. It is shown that under fairly general conditions full information disclosure is possible if and only if the induced...

Persistent link: https://www.econbiz.de/10010702847

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