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Title:Competitive equilibria in decentralized matching with incomplete information PDF Logo
Authors:Atakan, Alp E.
Issue Date:2007
Series/Report no.:Discussion paper // Center for Mathematical Studies in Economics and Management Science 1437
Abstract:This paper shows that all perfect Bayesian equilibria of a dynamic matching game with two-sided incomplete information of independent private values variety converge to competitive equilibria. Buyers purchase a bundle of heterogeneous, indivisible goods and sellers own one unit of an indivisible good. Buyer preferences and endowments as well as seller costs are private information. Agents engage in costly search and meet randomly. The terms of trade are determined through bilateral bargaining between buyers and sellers. The paper considers a market in steady state. It is shown that as frictions disappear, i.e., as discounting and the fixed cost of search become small, all equilibria of the market game converge to perfectly competitive equilibria.
Subjects:Matching and bargaining
foundations for perfect competition
two-sided incomplete information
Document Type:Working Paper
Appears in Collections:Discussion Papers, Kellogg School of Management, Northwestern University

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