Working paper

Ready to trade? On budget-balanced e¢ cient trade with uncertain arrival

Daniel F. Garrett

Abstract

This paper studies the design of e¢ cient mechanisms for repeated trade in settings where (i) tradersvalues and costs evolve randomly with time, and (ii) the traders become ready and available to participate in the mechanism at random times. Under a weak condition, analogous to the non-overlapping supports condition of Myerson and Satterthwaite (1983), e¢ cient trade is only feasible if the mechanism runs an expected budget decit. The smallest such decit is attainable by a sequence of static mechanisms.

Keywords

dynamic mechanism design; repeated trade; budget balance; dynamic arrivals; participation constraints;

JEL codes

  • D82: Asymmetric and Private Information • Mechanism Design

Reference

Daniel F. Garrett, Ready to trade? On budget-balanced e¢ cient trade with uncertain arrival, September 2016.

See also

Published in

September 2016