Working Paper No. 202

Ex Post Efficiency and Individual Rationality in Incentive Compatible Trading Mechanisms

Published: December, 1988Pages: 21Keywords: Efficient trading, mechanism designJEL-codes: 026

Ex Post Efficiency and Individual Rationality in Incentive Compatible Trading Mechanisms Stefan Lundgren


This paper concerns the design of a trading mechanism for a group of traders when their valuations of the good are private information and they bargain over who shall consume more than his initial endowment and who shall consume less. It is shown that there generally exists a set of initial endowments of the traded commodity such that it is possible to design a trading mechanism which is incentive compatible, individually rational and ex post efficient.

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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