A dominant-strategy asset market mechanism

Journal Article (Journal Article)

Asset markets—institutions that reallocate goods among agents with heterogeneous endowments, demands, and valuations—abound in the real world but have received little attention in mechanism and market design. Assuming constant marginal, private values and known endowments and maximum demands, we provide a detail-free, dominant-strategy asset market mechanism that allocates efficiently or close to efficiently, respects traders' individual rationality constraints ex post, and never runs a deficit. If it does not allocate efficiently, it sacrifices the trades that under efficiency would involve the lowest-value trader who efficiently would be allocated a positive amount. The mechanism always allocates the quantity traded efficiently and permits clock implementation. As the market becomes large, the mechanism's efficiency loss converges to zero under natural conditions.

Full Text

Duke Authors

Cited Authors

  • Loertscher, S; Marx, LM

Published Date

  • March 1, 2020

Published In

Volume / Issue

  • 120 /

Start / End Page

  • 1 - 15

Electronic International Standard Serial Number (EISSN)

  • 1090-2473

International Standard Serial Number (ISSN)

  • 0899-8256

Digital Object Identifier (DOI)

  • 10.1016/j.geb.2019.12.001

Citation Source

  • Scopus