Selling Procedures with Private Information and Common Values

John H. Lindsey, II, William Samuelson and Richard Zeckhauser
Additional contact information
John H. Lindsey, II: Harvard University, Cambridge, Massachusetts 02138
William Samuelson: School of Management, Boston University, 704 Commonwealth Avenue, Boston, Massachusetts 02215

Management Science, 1996, vol. 42, issue 2, 220-231

Abstract: The seller posted-price procedure is probably the most common method for making transactions in modern economies. We analyze the performance of posted pricing for transactions having significant common-value elements. In a model of two-sided private information, we characterize the fully revealing, perfect equilibrium offer strategy of the seller. We also characterize equilibrium behavior under two other pricing procedures---a sealed-bid procedure and a direct revelation mechanism. Finally, we examine the efficiency of these procedures and show that as the degree of common values increases, fewer mutually beneficial agreements are attained.

Keywords: bargaining; common values; game theory; asymmetric information (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:42:y:1996:i:2:p:220-231

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