Bilateral trade with strategic gradual learning
Kfir Eliaz and
Games and Economic Behavior, 2018, vol. 107, issue C, 380-395
We propose a model of bilateral trade in which private information about the quality of an asset can be acquired only gradually over time. An asset is characterized by a vector of binary i.i.d. attributes, and its worth to a player is equal to a weighted sum of the attributes' values (where weights differ across players). The seller is initially uninformed about the attributes' values, and each period he decides whether to make a price offer or to costlessly inspect an attribute's value. The buyer does not know the attributes' values, but he may or may not observe which inspections were performed (we consider both cases). We study the seller's strategic scheduling of inspections and its effect on the realized gains from trade in equilibrium. We identify the necessary and sufficient conditions under which the players can realize some gains from trade, and all gains from trade.
Keywords: Strategic scheduling; Gradual learning; Endogenous asymmetric information; Gains from trade (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Bilateral trade with strategic gradual learning (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:107:y:2018:i:c:p:380-395
Access Statistics for this article
Games and Economic Behavior is currently edited by E. Kalai
More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().