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Title:The rate of convergence to perfect competition of matching and bargaining mechanisms PDF Logo
Authors:Shneyerov, Artyom
Wong, Adam Chi Leung
Issue Date:2008
Series/Report no.:Discussion paper // Center for Mathematical Studies in Economics and Management Science 1467
Abstract:We study the steady state of a market with incoming cohorts of buyers and sellers who are matched pairwise and bargain under private information. We first consider generalized random-proposer take-it-or-leave-it offer games (GRP TIOLI games). This class of games includes a simple random-proposer TIOLI game, but also many other interesting bargaining games. A friction parameter is t , the length of the time period until the next meeting. We find that as t - O, all market equilibria converge to the Walrasian limit, at the fastest possible rate O(t) among all bargaining mechanisms. Some important bargaining games not in this class may have non-convergent market equilibria. This is the case for the k-double auction: we find that there are equilibria that converge at a linear rate, those that converge at a slower rate or even not converge at all.
Subjects:Matching and bargaining
search
double auctions
foundations for perfect competition
rate of convergence
JEL:C73
C78
D83
Document Type:Working Paper
Appears in Collections:Discussion Papers, Kellogg School of Management, Northwestern University

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