Bilateral trading and incomplete information: Price convergence in a small market

Abstract

We study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value. In addition to this seller with private information, there are two identical buyers and another seller, whose valuation is commonly known to be in between the two possible valuations of the seller with private information. We consider an infinite horizon game with simultaneous one-sided offers and simultaneous responses. We construct one particular PBE of the game and show that, as the discount factor goes to 1, prices in all transactions converge to the same value. We then show that this is the case with any stationary equilibrium of the game. That is, the asymptotic outcome is unique across all stationary equilibria.

Bilateral trading with incomplete information and price convergence in a small market: The continuous support case

“…Here we argue that even if this valuation has a continuous distribution on a finite support, a similar result will hold; namely as agents become patient enough, for any prior belief about the type of the privately informed seller, price offers in all stationary equilibria converge to the highest possible valuation of the privately informed seller. This shows the robustness of the result obtained in [1]. Please refer to [1] for related literature.…”

“…This shows the robustness of the result obtained in [1]. Please refer to [1] for related literature.…”

“…In this note, we argue that the asymptotic uniqueness result also holds when the privately informed seller's valuation is distributed on a continuous support. This shows the robustness of the uniqueness result obtained in Chatterjee and Das (2017).…”

“…In a recent paper [1] we examined a model of a small market with two homogeneous buyers and two heterogeneous sellers. In that paper, it was assumed that the privately informed seller's valuation is distributed on a two-point support.…”

Crowdsourcing Logistics Pricing Optimization Model Based on DBSCAN Clustering Algorithm

“…The crowdsourcing model, which greatly reduces the cost of human resources, is very suitable for the labor-intensive logistics enterprises, and its flexible working hours are also suitable for food delivery services, which have obvious peaks and valleys. In twosided market theory, platform pricing is the core issue and has important value in realizing the sustainable development of crowdsourcing logistics platforms [4]. The contribution of this paper is to discuss the network externality characteristics and pricing model of crowdsourcing logistics in the platform and to establish a reasonable pricing model based on the practical characteristics of crowdsourcing logistics to make it sustainable.…”