Efficient dark markets
Economic Theory, 2015, vol. 59, issue 3, 605-624
This paper studies a standard dynamic trading environment with asymmetric information. A trading mechanism, called a dark market, is proposed that achieves allocative efficiency (i.e., maximizes the total surplus). The mechanism’s critical feature is that it conceals from traders the history of past trades. Under plausible conditions, the dark market is stable (i.e., impervious to non-conforming trades offered by an entrant market-maker). Copyright Springer-Verlag Berlin Heidelberg 2015
Keywords: Dark markets; Efficiency; Stability; Information disclosure; G14; D02; D40 (search for similar items in EconPapers)
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