TY - JOUR
T1 - Convergence to perfect competition of a dynamic matching and bargaining market with two-sided incomplete information and exogenous exit rate
AU - Satterthwaite, Mark
AU - Shneyerov, Artyom
N1 - Funding Information:
We are grateful for the thoughtful, constructive questions and suggestions of an associate editor and two referees that have resulted in a much improved paper. We owe special thanks to Zvika Neeman who originally devised a proof showing the strict monotonicity of strategies. We also thank Hector Chade, Stephan Lauermann, Paul Milgrom, Dale Mortensen, Asher Wolinsky, and Jianjun Wu; the participants at the “Electronic Market Design Meeting” (June 2002, Schloss Dagstuhl), the 13th Annual International Conference on Game Theory at Stony Brook, the 2003 NSF Decentralization Conference held at Purdue University, the 2003 General Equilibrium Conference held at Washington University, and the 2003 Summer Econometric Society Meeting held at Northwestern University; seminar participants at Carnegie-Mellon, Washington University, Northwestern University, University of Michigan, Harvard and MIT, UBC, and Stanford; and the members of the collaborative research group on “Foundations of Electronic Marketplaces” for their constructive comments. Finally, both of us acknowledge gratefully that this material is based on work supported by the National Science Foundation under Grant IIS-0121541. Artyom Shneyerov also acknowledges support from the Canadian SSHRC Grant 410-2003-1366.
PY - 2008/7
Y1 - 2008/7
N2 - Consider a decentralized, dynamic market with an infinite horizon and incomplete information in which buyers and sellers' values for the traded good are private and independently drawn. Time is discrete, each period has length δ, and each unit of time a large number of new buyers and sellers enter the market. Within a period each buyer is matched with a seller and each seller is matched with zero, one, or more buyers. Every seller runs a first price auction with a reservation price and, if trade occurs, the seller and winning buyer exit with their realized utility. Traders who fail to trade either continue in the market to be rematched or exit at an exogenous rate. We show that in all steady state, perfect Bayesian equilibria, as δ approaches zero, equilibrium prices converge to the Walrasian price and realized allocations converge to the competitive allocation.
AB - Consider a decentralized, dynamic market with an infinite horizon and incomplete information in which buyers and sellers' values for the traded good are private and independently drawn. Time is discrete, each period has length δ, and each unit of time a large number of new buyers and sellers enter the market. Within a period each buyer is matched with a seller and each seller is matched with zero, one, or more buyers. Every seller runs a first price auction with a reservation price and, if trade occurs, the seller and winning buyer exit with their realized utility. Traders who fail to trade either continue in the market to be rematched or exit at an exogenous rate. We show that in all steady state, perfect Bayesian equilibria, as δ approaches zero, equilibrium prices converge to the Walrasian price and realized allocations converge to the competitive allocation.
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U2 - 10.1016/j.geb.2008.04.014
DO - 10.1016/j.geb.2008.04.014
M3 - Article
AN - SCOPUS:44649171744
VL - 63
SP - 435
EP - 467
JO - Games and Economic Behavior
JF - Games and Economic Behavior
SN - 0899-8256
IS - 2
ER -