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Caltech

Ulric B. and Evelyn L. Bray Social Sciences Seminar

Tuesday, May 7, 2024
4:00pm to 5:00pm
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Baxter B125
Buying from a Group
Elliot Lipnowski, Assistant Professor of Economics, Columbia University,

Abstract: A buyer procures a good owned by a group of sellers whose heterogeneous cost of trade is private information. The buyer must either buy the whole good or nothing, and sellers share the transfer in proportion to their share of the good. We characterize the optimal mechanism: trade occurs if and only if the buyer's benefit of trade exceeds a weighted average of sellers' virtual costs. These weights are endogenous, with sellers who are ex ante less inclined to trade receiving higher weight. This mechanism always outperforms posted-price mechanisms. An extension characterizes the entire Pareto frontier.

For more information, please contact Barbara Estrada by phone at 626-395-4083 or by email at [email protected].