A dominant-strategy asset market mechanism
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.
Duke Scholars
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- Economic Theory
- 3803 Economic theory
- 3801 Applied economics
- 1402 Applied Economics
- 1401 Economic Theory
Citation
Published In
DOI
EISSN
ISSN
Publication Date
Volume
Start / End Page
Related Subject Headings
- Economic Theory
- 3803 Economic theory
- 3801 Applied economics
- 1402 Applied Economics
- 1401 Economic Theory