The Efficient Bilateral Trade of an Indivisible Good: Successively Arriving Information

Karsten Fieseler ()
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Karsten Fieseler: Sonderforschungsbereich 504, Postal: L 13, 15, D-68131 Mannheim

No 99-78, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: In a model of bilateral trade under asymmetric information, Myerson and Satterthwaite (1983) show that there does not exist any bargaining game which results in an efficient outcome. We analyse a model with multiple sources of uncertainty, some of which is privately known before bargaining (initial private information) and some of which is learned later (late private information). The Myerson and Satterthwaite impossibility result is no immediate consequence of initial private information, but depends on how both kinds of private information interact.

Pages: 23 pages
Date: 1999-09-01
Note: I am grateful to Martin Hellwig and Benny Moldovanu for their advice. I also wish to thank Roman Inderst, Thomas Kittsteiner, Joerg Nikutta, Mark Satterthwaite, Jan Vleugels and seminar participants at Mannheim and Santiago de Compostela (1999 European Meeting of the Econometric Society) for helpful comments. Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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