Decentralised Bilateral Trading in a Market with Incomplete Information

Kalyan Chatterjee and Kaustav Das
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Kalyan Chatterjee: Department of Economics, Pennsylvania State University.
Kaustav Das: Department of Economics, University of Exeter

No 1313, Discussion Papers from University of Exeter, Department of Economics

Abstract: We study a model of decentralised bilateral interactions in a small market where one of the sellers has private information about her value. There are two identical buyers and another seller, whose valuation is commonly known to be in between the two possible valuations of the informed seller. We consider two in?nite horizon games, with public and private simultaneous one-sided o¤ers respectively and simultaneous responses. We show that there is a stationary perfect Bayes?equilibrium for both models such that prices in all transactions converge to the same value as the discount factor goes to 1.

Keywords: Bilateral Bargaining; Incomplete information; Outside options; Coase conjecture. (search for similar items in EconPapers)
JEL-codes: C78 D82 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth and nep-mic
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:1313

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