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Multidimensional bargaining and posted prices

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  • Hagen, Martin
  • Hernando-Veciana, Ángel

Abstract

A seller and a buyer bargain over the quantities and prices of multiple goods. Both agents have private information about their preferences. Utility is quasilinear in money. We show that a deterministic mechanism satisfies (i) dominant-strategy incentive compatibility, (ii) ex-post individual rationality and (iii) ex-post budget balance if and only if it is a posted-price mechanism. A similar, more general result holds if (iii) is replaced by ex-post collusion-proofness and a no-free lunch condition. We provide a unified proof of both findings via the property of non-bossiness.

Suggested Citation

  • Hagen, Martin & Hernando-Veciana, Ángel, 2021. "Multidimensional bargaining and posted prices," Journal of Economic Theory, Elsevier, vol. 196(C).
    • Handle: RePEc:eee:jetheo:v:196:y:2021:i:c:s0022053121001344
    DOI: 10.1016/j.jet.2021.105317
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    Cited by:

    1. Hagen, Martin, 2023. "Collusion-proof mechanisms for multi-unit procurement," Games and Economic Behavior, Elsevier, vol. 138(C), pages 281-298.

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    More about this item

    Keywords

    Mechanism design; Bilateral trade; Multidimensional private information; Posted prices; Dominant strategies; Collusion-proofness;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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