Transparency in Sequential Common-Value Trade

Justus Preusser () and Andre Speit ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We consider the sale of a single indivisible common-value good in a dynamic market where short-lived buyers arrive over time. Buyers observe private signals about the value. The seller is initially uninformed and proposes the terms of trade. As time passes, all players learn about the value from delay in trade. Importantly, this learning process depends on what is made public about buyer-seller interactions. We compare the division of surplus across three transparency regimes that differ with respect to whether buyers observe the seller’s past actions or time-on-the-market. When the seller’s time-on-the market but not the seller’s past actions are observable, and if buyers’ signals are sufficiently rich, then there is no perfect Bayesian equilibrium where the seller extracts the full surplus. In the other two regimes, where buyers observe either everything or nothing about the seller’s past actions and time-on-the-market, the seller extracts the full surplus in at least one equilibrium, no matter the signal structure.

Keywords: Common-value; dynamic trade; transparency; learning; division of surplus (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Pages: 55
Date: 2023-12
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
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