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Bilateral trading with incomplete information and price convergence in a small market: The continuous support case

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journal contribution
posted on 29.08.2019, 13:19 by Kalyan Chatterjee, Kaustav Das
Chatterjee and Das (2017) recently examined a model of a small market with two homogeneous buyers and two heterogeneous sellers with one of the sellers having private information. They show that as agents become patient enough, for any prior belief about the type of the privately informed seller, in any stationary equilibrium, prices in all transactions converge to the highest possible valuation of the informed seller. In the model, it was assumed that the privately informed seller’s type is distributed on a two-point support. In this note, we argue that the asymptotic uniqueness result also holds when the privately informed seller’s valuation is distributed on a continuous support. This shows the robustness of the uniqueness result obtained in Chatterjee and Das (2017).

Funding

Dr Chatterjee would also like to thank the Institute for Advanced Study, Princeton, and the Richard B. Fisher endowment for financial support of his membership of the Institute during the year 2014–2015.

History

Citation

Economics Letters, 2018, 163, pp. 118-120

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/School of Business

Version

AM (Accepted Manuscript)

Published in

Economics Letters

Publisher

Elsevier

issn

0165-1765

Acceptance date

01/12/2017

Copyright date

2017

Available date

29/08/2019

Publisher version

https://www.sciencedirect.com/science/article/pii/S0165176517304913?via=ihub

Language

en