Mechanisms for Repeated Trade
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 th...
| Main Authors: | , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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American Economic Association (AEA)
2017
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| Online Access: | http://hdl.handle.net/1721.1/109383 https://orcid.org/0000-0003-0400-5733 |
| _version_ | 1826217765656068096 |
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| author | Skrzypacz, Andrzej Toikka, Juuso T |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Skrzypacz, Andrzej Toikka, Juuso T |
| author_sort | Skrzypacz, Andrzej |
| collection | MIT |
| description | 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. |
| first_indexed | 2024-09-23T17:08:48Z |
| format | Article |
| id | mit-1721.1/109383 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T17:08:48Z |
| publishDate | 2017 |
| publisher | American Economic Association (AEA) |
| record_format | dspace |
| spelling | mit-1721.1/1093832022-09-30T00:01:17Z Mechanisms for Repeated Trade Skrzypacz, Andrzej Toikka, Juuso T Massachusetts Institute of Technology. Department of Economics Toikka, Juuso T 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. 2017-05-26T18:00:51Z 2017-05-26T18:00:51Z 2015-11 Article http://purl.org/eprint/type/JournalArticle 1945-7669 1945-7685 http://hdl.handle.net/1721.1/109383 Skrzypacz, Andrzej, and Juuso Toikka. “ Mechanisms for Repeated Trade † .” American Economic Journal: Microeconomics 7, no. 4 (November 2015): 252–293. © 2016 AEA. https://orcid.org/0000-0003-0400-5733 en_US http://dx.doi.org/10.1257/mic.20140173 American Economic Journal: Microeconomics 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. application/pdf American Economic Association (AEA) American Economic Association |
| spellingShingle | Skrzypacz, Andrzej Toikka, Juuso T Mechanisms for Repeated Trade |
| title | Mechanisms for Repeated Trade |
| title_full | Mechanisms for Repeated Trade |
| title_fullStr | Mechanisms for Repeated Trade |
| title_full_unstemmed | Mechanisms for Repeated Trade |
| title_short | Mechanisms for Repeated Trade |
| title_sort | mechanisms for repeated trade |
| url | http://hdl.handle.net/1721.1/109383 https://orcid.org/0000-0003-0400-5733 |
| work_keys_str_mv | AT skrzypaczandrzej mechanismsforrepeatedtrade AT toikkajuusot mechanismsforrepeatedtrade |