Information aggregation in a large multi-stage market game

Tai Wei Hu; Neil Wallace

doi:10.1016/j.jet.2015.11.005

Information aggregation in a large multi-stage market game

Tai Wei Hu^*, Neil Wallace

^*Corresponding author for this work

Managerial Economics, Decision Sciences and Operations

Research output: Contribution to journal › Article › peer-review

3 Scopus citations

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 language	English (US)
Pages (from-to)	103-144
Number of pages	42
Journal	Journal of Economic Theory
Volume	161
DOIs	https://doi.org/10.1016/j.jet.2015.11.005
State	Published - Jan 1 2016

Keywords

Efficiency
Information-aggregation
Market-game
Mechanism-design

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.jet.2015.11.005

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title = "Information aggregation in a large multi-stage market game",

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.",

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AB - 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.

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KW - Market-game

KW - Mechanism-design

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ER -

Information aggregation in a large multi-stage market game

Abstract

Keywords

ASJC Scopus subject areas

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