On the existence of efficient multilateral trading mechanisms with interdependent values

Kwanghyun Kim ()
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Kwanghyun Kim: School of Data Science, Capital University of Economics and Business

International Journal of Game Theory, 2024, vol. 53, issue 2, No 12, 579-608

Abstract: Abstract This paper studies multilateral trading problems in which agents’ valuations for items are interdependent. Assuming that each agent’s information has a greater marginal effect on her own valuation than on the other agents’ valuations, the paper identifies a necessary and sufficient condition for the existence of trading mechanisms satisfying efficiency, ex-post incentive compatibility, ex-post individual rationality, and ex-post budget balance. The paper presents a trading mechanism that satisfies the four properties when the necessary and sufficient condition holds and shows that this mechanism maximizes the ex-post budget surplus among all efficient, ex-post incentive compatible, and ex-post individually rational trading mechanisms. The paper examines an environment where each agent can possess at most one unit of an item, and her information about the item is one-dimensional. It then extends the results to two general environments: the multiple units environment and the multidimensional information environment.

Keywords: Interdependent values; Ex-post Nash equilibrium; Multilateral trading mechanisms (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00182-023-00883-y

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