Information aggregation in a large multi-stage market game

Tai Wei Hu; Neil Wallace

doi:10.1016/j.jet.2015.11.005

Information aggregation in a large multi-stage market game

Tai Wei Hu^*, Neil Wallace

^*Corresponding author for this work

School of Economics

Research output: Contribution to journal › Article (Academic Journal) › peer-review

3 Citations (Scopus)

300 Downloads (Pure)

Abstract

A three-stage market-game mechanism is devised that is simple (actions are quantities and outcomes are determined by arithmetic operations that do not depend on details of the economy) and achieves efficiency in a two-divisible-good, pure-exchange setting with potential information-aggregation. After an entry stage, agents make offers which are provisional for all but a small, randomly selected group. Then, those offers are announced, and everyone else makes new offers with payoffs determined by a Shapley-Shubik market game. For a finite and large number of players, there exists an almost ex post efficient equilibrium. Conditions for uniqueness are also provided.

Original language	English
Pages (from-to)	103-144
Number of pages	42
Journal	Journal of Economic Theory
Volume	161
Early online date	2 Dec 2015
DOIs	https://doi.org/10.1016/j.jet.2015.11.005
Publication status	Published - Jan 2016

Keywords

Efficiency
Information-aggregation
Market-game
Mechanism-design

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10.1016/j.jet.2015.11.005

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This is the author accepted manuscript (AAM). The final published version (version of record) is available online via Elsevier at http://www.sciencedirect.com/science/article/pii/S0022053115001994?via%3Dihub. Please refer to any applicable terms of use of the publisher.
Accepted author manuscript, 534 KBLicence: Unspecified

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abstract = "A three-stage market-game mechanism is devised that is simple (actions are quantities and outcomes are determined by arithmetic operations that do not depend on details of the economy) and achieves efficiency in a two-divisible-good, pure-exchange setting with potential information-aggregation. After an entry stage, agents make offers which are provisional for all but a small, randomly selected group. Then, those offers are announced, and everyone else makes new offers with payoffs determined by a Shapley-Shubik market game. For a finite and large number of players, there exists an almost ex post efficient equilibrium. Conditions for uniqueness are also provided.",

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AB - A three-stage market-game mechanism is devised that is simple (actions are quantities and outcomes are determined by arithmetic operations that do not depend on details of the economy) and achieves efficiency in a two-divisible-good, pure-exchange setting with potential information-aggregation. After an entry stage, agents make offers which are provisional for all but a small, randomly selected group. Then, those offers are announced, and everyone else makes new offers with payoffs determined by a Shapley-Shubik market game. For a finite and large number of players, there exists an almost ex post efficient equilibrium. Conditions for uniqueness are also provided.

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KW - Information-aggregation

KW - Market-game

KW - Mechanism-design

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SP - 103

EP - 144

JO - Journal of Economic Theory

JF - Journal of Economic Theory

SN - 0022-0531

ER -

Information aggregation in a large multi-stage market game

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Professor Tai-Wei Hu

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Information aggregation in a large multi-stage market game

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Professor Tai-Wei Hu

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