Dissolving a partnership securely

Matthew Van Essen and John Wooders

Economic Theory, 2020, vol. 69, issue 2, No 5, 415-434

Abstract: Abstract We characterize security strategies and payoffs for three mechanisms for dissolving partnerships: the Texas Shoot-Out, the $$K+1$$K+1 auction, and the compensation auction. A security strategy maximizes a participant’s minimum payoff, and represents a natural starting point for analysis when a participant is either uncertain of the environment or uncertain of whether his rivals will play equilibrium. For the compensation auction, a dynamic dissolution mechanism, we introduce the notion of a perfect security strategy. Such a strategy maximizes a participant’s minimum payoff along every path of play. We show that while a player has many security strategies in the compensation auction, he has a unique perfect security strategy.

Keywords: Partnerships; Maximin; Auction (search for similar items in EconPapers)
JEL-codes: D44 D47 D82 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00199-019-01177-9

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