Partnerships, lemons and efficient trade

Document Type:	Working paper
Year of publication:	1999
The title of a journal, publication series:	Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
Volume:	99-71
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > VWL, Mikroökonomische Theorie (von Thadden)
MADOC publication series:	Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject:	330 Economics
Abstract:	We analyze the possibility of e¢cient trade with informationally interdependent valuations and with a dispersed ownership. A crucial role is played by the sign of the derivatives that measure how valuation functions depend on others’ signals. If valuations are increasing functions of other agents’ signals, it is more di¢cult to achieve e¢cient trade with interdependent values than with private values (where the respective derivatives are zero.) In contrast, if valuations are decreasing functions of other agents’ signals, it is easier to achieve e¢cient trade with interdependent values. Our results unify and generalize the insights of Cramton et al. [1987], Myerson and Satterthwaite [1983], and Akerlof [1970].