Information aggregation in a large multi-stage market game

Tai Wei Hu*, Neil Wallace

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

3 Citations (Scopus)
239 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 languageEnglish
Pages (from-to)103-144
Number of pages42
JournalJournal of Economic Theory
Volume161
Early online date2 Dec 2015
DOIs
Publication statusPublished - Jan 2016

Keywords

  • Efficiency
  • Information-aggregation
  • Market-game
  • Mechanism-design

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