Decentralized information and the Walrasian outcome: a pairwise meetings market with private values

Serrano, Roberto

doi:10.1016/s0304-4068(02)00069-1

Cited by 35 publications

(25 citation statements)

References 32 publications

(20 reference statements)

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“…This result is extended to the case of incomplete information about buyer preferences in a two-type model by Moreno and Wooders (2002) and two-sided incomplete information by Satterthwaite and Shneyerov (2006). In the models of DeFraja and Sakovics (2001), Serrano (2002) and Wolinsky (1990) convergence to a competitive equilibrium fails. The failure of convergence to competitive equilibrium is caused by the bilateral bargaining protocol in Serrano (2002), results from the inefficiency of aggregating common value information through bilateral 2.…”

Section: Introductionmentioning

confidence: 90%

“…In the models of DeFraja and Sakovics (2001), Serrano (2002) and Wolinsky (1990) convergence to a competitive equilibrium fails. The failure of convergence to competitive equilibrium is caused by the bilateral bargaining protocol in Serrano (2002), results from the inefficiency of aggregating common value information through bilateral 2. The Model Buyers and sellers in the economy search for possible trading partners.…”

Section: Introductionmentioning

confidence: 99%

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Competitive Equilibria in Decentralized Matching With Incomplete Information

Atakan

2007

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Abstract.This paper shows that all perfect Bayesian equilibria of a decentralized dynamic matching market with two-sided incomplete information of independent private values variety converge to competitive equilibria. Each buyer wants to purchase a bundle of heterogeneous, indivisible goods and each seller owns one unit of a heterogeneous indivisible good (as in Kelso and Crawford (1982) or Gul and Stacchetti (1999)). Buyer preferences and endowments as well as seller costs are private information. Agents engage in costly search and meet randomly. The terms of trade are determined through bilateral bargaining between buyers and sellers. The paper considers a market in steady state. It is shown that as frictions, i.e., discounting and fixed costs of search become small, all equilibria of the market game converge to perfectly competitive equilibria.

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Section: Introductionmentioning

confidence: 90%

Section: Introductionmentioning

confidence: 99%

Competitive Equilibria in Decentralized Matching With Incomplete Information

Atakan

2007

SSRN Journal

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“…The most important dynamic bargaining and matching models that incorporate incomplete information are Wolinsky (1988), De Fraja and Sákovics (2001), and Serrano (2002). 23 To understand how our paper relates to these papers, consider the following problem as the baseline.…”

Section: Introductionmentioning

confidence: 99%

Dynamic Matching, Two-Sided Incomplete Information, and Participation Costs: Existence and Convergence to Perfect Competition

Satterthwaite¹,

Shneyerov²

2007

Econometrica

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Consider a decentralized, dynamic market with an infinite horizon and participation costs in which both buyers and sellers have private information concerning their values for the indivisible traded good. Time is discrete, each period has length δ, and each unit of time continuums of new buyers and sellers consider entry. Traders whose expected utility is negative choose not to enter. Within a period each buyer is matched anonymously with a seller and each seller is matched with zero, one, or more buyers. Every seller runs a first price auction with a reservation price and, if trade occurs, both the seller and winning buyer exit the market with their realized utility. Traders who fail to trade continue in the market to be rematched. We characterize the steady-state equilibria that satisfy a subgame perfection criterion. We show that, as δ converges to zero, equilibrium prices at which trades occur converge to the Walrasian price and the realized allocations converge to the competitive allocation. We also show existence of equilibria for δ sufficiently small.

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“…We find that k-DA equilibria can be either convergent at a linear rate, convergent at a slower rate or even divergent. Our double auction result can be compared to the findings in Serrano (2002). In a dynamic setting, Serrano (2002) studies a mechanism that in some respects resembles a double auction (the set of bids is restricted to be a finite grid) and finds that "as discounting is removed, equilibria with Walrasian and nonWalrasian features persist".…”

Section: Introductionmentioning

confidence: 69%

“…Our double auction result can be compared to the findings in Serrano (2002). In a dynamic setting, Serrano (2002) studies a mechanism that in some respects resembles a double auction (the set of bids is restricted to be a finite grid) and finds that "as discounting is removed, equilibria with Walrasian and nonWalrasian features persist". 9 Serrano points out, however, that "after removing the finite sets of traders' types and of allowed prices, the present model confirms Gale's one-price result and has a strong Walrasian flavor".…”

Section: Introductionmentioning

confidence: 69%

The rate of convergence to perfect competition of matching and bargaining mechanisms

Shneyerov

Wong

2010

Journal of Economic Theory

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We study the steady state of a market with incoming cohorts of buyers and sellers who are matched pairwise and bargain under private information. A friction parameter is τ , the length of the time period until the next meeting. We provide a necessary and sufficient condition for the convergence of mechanism outcomes to perfect competition at the linear rate in τ , which is shown to be the fastest possible among all bargaining mechanisms. The condition requires that buyers and sellers always retain some bargaining power. The bargaining mechanisms that satisfy this condition are called nonvanishing bargaining power (NBP) mechanisms. Simple random proposer take-itor-leave-it protocols are NBP, while k-double auctions (k-DA) are not. We find that k-DAs have equilibria that converge to perfect competition at a linear rate, converge at a slower rate or even do not converge at all.

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Decentralized information and the Walrasian outcome: a pairwise meetings market with private values

Cited by 35 publications

References 32 publications

Competitive Equilibria in Decentralized Matching With Incomplete Information

Competitive Equilibria in Decentralized Matching With Incomplete Information

Dynamic Matching, Two-Sided Incomplete Information, and Participation Costs: Existence and Convergence to Perfect Competition

The rate of convergence to perfect competition of matching and bargaining mechanisms

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