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The efficiency of linear equilibria of sealed-bid double auctions

Authors
Journal
Journal of Economic Theory
0022-0531
Publisher
Elsevier
Publication Date
Volume
53
Issue
1
Identifiers
DOI: 10.1016/0022-0531(91)90147-v

Abstract

Abstract This paper modifies Myerson and Satterthwaite's ( J. Econ. Theory 29 (1983), 265–281) analysis of direct bilateral-trade mechanisms with two-sided incomplete information by developing a new technique for analyzing their payment rule restrictions. For each member of a narrow class of beliefs, this new technique defines a mechanism that is both ex ante efficient and ex post individually rational. Moreover, the resulting allocation is shown to be equivalent to that generated by the linear equilibrium of a k-double auction.

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