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Dissolving a partnership securely

Author

Listed:
  • Matt Essen

    (University of Alabama)

  • John Wooders

    (New York University Abu Dhabi)

Abstract

We characterize security strategies and payoffs for three mechanisms for dissolving partnerships: the Texas Shoot-Out, the $$K+1$$K+1 auction, and the compensation auction. A security strategy maximizes a participant’s minimum payoff, and represents a natural starting point for analysis when a participant is either uncertain of the environment or uncertain of whether his rivals will play equilibrium. For the compensation auction, a dynamic dissolution mechanism, we introduce the notion of a perfect security strategy. Such a strategy maximizes a participant’s minimum payoff along every path of play. We show that while a player has many security strategies in the compensation auction, he has a unique perfect security strategy.

Suggested Citation

  • Matt Essen & John Wooders, 2020. "Dissolving a partnership securely," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(2), pages 415-434, March.
    • Handle: RePEc:spr:joecth:v:69:y:2020:i:2:d:10.1007_s00199-019-01177-9
    DOI: 10.1007/s00199-019-01177-9
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    References listed on IDEAS

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    Cited by:

    1. Bauch, Gerrit & Riedel, Frank, 2024. "The Texas Shoot-Out under Knightian uncertainty," Games and Economic Behavior, Elsevier, vol. 146(C), pages 35-50.

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    More about this item

    Keywords

    Partnerships; Maximin; Auction;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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