Q2. What are the future works in this paper?
Studying such extensions is an interesting avenue for future research.
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...This condition is equivalent to λ ≥ λ∗, where λ∗ is given by 9 Recently, Shimer and Werning (2019) relax this commitment assumption....
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...6 For the mechanism that I use in the bilateral trading, I follow the literature on bargaining under asymmetric information using the mechanism design approach: Myerson (1979), Myerson and Satterthwaite (1983), Samuelson (1984), and recently Shimer and Werning (2019)....
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...We prove in Section 4 that revealing information is costless in pure private values environment, such as Myerson and Satterthwaite (1983)....
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...We briefly comment on the private values case, a common simplifying assumption in the mechanism design literature (Myerson and Satterthwaite, 1983; McAfee and Reny, 1992)....
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2,011 citations
...In the standard mechanism design approach to bargaining (Myerson, 1979), each trader observes his own signal and makes a report to the mechanism, which then instructs the traders on whether and at what price to trade as a function of those reports....
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...Using the Revelation Principle (Myerson, 1979), we focus without loss of generality on a direct revelation mechanism, where each trader is induced to truthfully report his signal to a mechanism....
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...Using the revelation principle (Myerson, 1979), we know that any trading mechanism is payoffequivalent to a direct revelation mechanism....
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...First, Myerson (1979) proves that the seller’s incentive constraint is equivalent to imposing that q(s) is nonincreasing and t(s) = q(s)s + ˆ s̄ s q(v)dv + t(s̄)− q(s̄)s̄ for all s. (13) Substitute this into problem (1) and use integration-by-parts to rewrite it as max {t(s̄),q(s)} ˆ s̄ s…...
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827 citations
Studying such extensions is an interesting avenue for future research.