TY - JOUR
T1 - Bilateral trading with incomplete information and price convergence in a small market
T2 - The continuous support case
AU - Chatterjee, Kalyan
AU - Das, Kaustav
N1 - Funding Information:
The authors wish to thank Siddhartha Bandopadhyay, Martin Cripps, Bhaskar Dutta, Faruk Gul, Ed Green, Vijay Krishna, Selçuk Özyurt, Larry Samuelson and Asher Wolinsky for their insightful comments and suggestions. We also thank the conference participants of the Royal Economic Society, World Congress of the Econometric Society and the seminar participants at Brown University and the Indian Statistical Institute for helpful comments. Finally, we thank the Editor, Roberto Serrano, for his help during the review process. Dr Chatterjee would also like to thank the Institute for Advanced Study, Princeton, and the Richard B. Fisher endowment for financial support of his membership of the Institute during the year 2014–2015.
Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2018/2
Y1 - 2018/2
N2 - Chatterjee and Das (2017) recently examined a model of a small market with two homogeneous buyers and two heterogeneous sellers with one of the sellers having private information. They show that as agents become patient enough, for any prior belief about the type of the privately informed seller, in any stationary equilibrium, prices in all transactions converge to the highest possible valuation of the informed seller. In the model, it was assumed that the privately informed seller's type is distributed on a two-point support. In this note, we argue that the asymptotic uniqueness result also holds when the privately informed seller's valuation is distributed on a continuous support. This shows the robustness of the uniqueness result obtained in Chatterjee and Das (2017).
AB - Chatterjee and Das (2017) recently examined a model of a small market with two homogeneous buyers and two heterogeneous sellers with one of the sellers having private information. They show that as agents become patient enough, for any prior belief about the type of the privately informed seller, in any stationary equilibrium, prices in all transactions converge to the highest possible valuation of the informed seller. In the model, it was assumed that the privately informed seller's type is distributed on a two-point support. In this note, we argue that the asymptotic uniqueness result also holds when the privately informed seller's valuation is distributed on a continuous support. This shows the robustness of the uniqueness result obtained in Chatterjee and Das (2017).
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U2 - 10.1016/j.econlet.2017.12.002
DO - 10.1016/j.econlet.2017.12.002
M3 - Article
AN - SCOPUS:85038414683
VL - 163
SP - 118
EP - 120
JO - Economics Letters
JF - Economics Letters
SN - 0165-1765
ER -