A simple status quo that ensures participation (with application to efficient bargaining)

, R. () and , D. ()
Additional contact information
, R.: Department of Economics, Stanford University
, D.: Department of Economics, Northwestern University
Authors registered in the RePEc Author Service: Michael Whinston

Theoretical Economics, 2011, vol. 6, issue 1

Abstract: We consider Bayesian incentive-compatible mechanisms with independent types and either private values or interdependent values that satisfy a form of "congruence." We show that in these settings, interim participation constraints are satisfied when the status quo is the randomized allocation that has the same distribution as the equilibrium allocation in the mechanism. Moreover, when utilities are convex in the allocation, we can instead satisfy participation constraints with the deterministic status quo equal to the expected equilibrium allocation in the mechanism. For quasilinear settings, these observations imply the possibility of efficient bargaining when the status quo specifies the expected efficient decision provided that the total surplus is convex in the decision.

Keywords: Efficient property rights; asymmetric information bargaining; transaction costs (search for similar items in EconPapers)
JEL-codes: C78 D23 D44 (search for similar items in EconPapers)
Date: 2011-01-23
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewFile/20110109/4785/173 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:591

Access Statistics for this article

Theoretical Economics is currently edited by Simon Board, Todd D. Sarver, Juuso Toikka, Rakesh Vohra, Pierre-Olivier Weill

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().