We study the possibility of efficient trade with informationally interdependent valuations. In a model based on the bilateral trade situation studied in Myerson and Satterthwaite (1983) efficient trade is only possible in trivial cases where the seller's valuation always exceeds the buyer's...

In a model of bilateral trade under asymmetric information, Myerson and Satterthwaite (1983) show that there does not exist any bargaining game which results in an efficient outcome. We analyse a model with multiple sources of uncertainty, some of which is privately known before bargaining...

We analyse the bidding for unit-price contracts, a very common procurement auction. With a unit price contract, not the provision of the good but the employment of several kinds of inputs is priced. The seller charges a unit price for the employed quantity of each input. To select one seller, a...

We analyze the possibility of efficient 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...

In competitive procurement auctions, bids often have the form of unit-price contracts (UPCs). We show that optimal bidding behavior in UPC auctions is typically non-monotonic, and therefore may lead to inefficient allocations. However, UPC auctions may still be desirable for the buyer when...

We analyse the revenue-maximising allocation of a single good of finite lifetime where the lifetime can be split up into a lease for an initial period and follow-up leases for the remaining time. The holder of the initial lease has private information about his willingness to pay. The...

The paper offers a concise proof of a rule attributed to Alfred Marshall concerning the own-price elasticity of a firm's derived factor demand. The derivation uses the implicit function theorem.

This paper explores the consequences of assuming that agents may be unaware of certain outcomes in the state space. One way to construct such a setting is from what we call awareness types. When agents possess limited awareness of the state space, information may be delusive, but agents can...

We show that strictly competitive, finite games of perfect information that may end in one of three possible ways can be solved by applying only two rounds of elimination of dominated strategies.

In many developed countries, an essential part of a bank's capital requirement may be directly tied to a risk figure taken from the bank's own risk model. When capital is scarce, this creates a conflict of interests because the bank's management may want to manipulate its internal risk model in...