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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 6, Number 1 (January 2011) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/27176

Title: A simple status quo that ensures participation (with application to efficient bargaining)
Authors: Ilya R. Segal; Department of Economics, Stanford University
Michael D. Whinston; Department of Economics, Northwestern University
Keywords: Efficient property rights, asymmetric information bargaining, transaction costs
C78, D23, D44
Issue Date: 23-Jan-2011
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 6, No 1 (2011)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] We consider Bayesian incentive-compatible mechanisms with independent types and either private values or interdependent values that satisfy a form of "congruence." We show that in these settings, interim participation constraints are satisfied when the status quo is the randomized allocation that has the same distribution as the equilibrium allocation in the mechanism. Moreover, when utilities are convex in the allocation, we can instead satisfy participation constraints with the deterministic status quo equal to the expected equilibrium allocation in the mechanism. For quasilinear settings, these observations imply the possibility of efficient bargaining when the status quo specifies the expected efficient decision provided that the total surplus is convex in the decision.
URI: http://hdl.handle.net/1807/27176
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20110109
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 6, Number 1 (January 2011)

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