Mechanisms for Repeated Trade
Name
Mechanisms for repeated trade.pdf
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705.04 KB
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Author(s)
Skrzypacz, Andrzej
Toikka, Juuso T
Date Issued
November 2015
Journal
American Economic Journal: Microeconomics
Publisher
American Economic Association (AEA)
Citation
Skrzypacz, Andrzej, and Juuso Toikka. “ Mechanisms for Repeated Trade † .” American Economic Journal: Microeconomics 7, no. 4 (November 2015): 252–293. © 2016 AEA.
Version
Final published version
Abstract
How does feasibility of efficient repeated trade depend on the features of the environment such as persistence of values, private information about their evolution, or trading frequency? We derive a necessary and sufficient condition for efficient, unsubsidized, and voluntary trade, which implies that efficient contracting requires sufficient congruence of expectations. This translates to bounds on persistence of values and on private information about their evolution, and distinguishes increasing patience from more frequent interaction; the latter need not facilitate efficiency even when the former does. We also discuss second-best mechanisms and extend the characterization to general dynamic collective choice problems.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/mic.20140173
