What to Put on the Table

22 Pages Posted: 17 Apr 2008

See all articles by Vasiliki Skreta

Vasiliki Skreta

University of Texas at Austin - Department of Economics; University College London

Nicolas Figueroa

University of Minnesota - Twin Cities - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: Aug, 2007

Abstract

This paper investigates under which circumstances negotiating simultaneously over multiple issues or assets helps reduce inefficiencies due to the presence of asymmetric information. We find that a simultaneous negotiation over multiple assets that are substitutes reduces inefficiencies. The effect is stronger if goods are heterogeneous, and in this case the inefficiency can be eliminated altogether. When assets are not substitutes inefficiencies always prevail. We also study cases where co-ownership is possible (partnerships), allowing for asymmetric distributions, general valuation functions and for multiple assets. We show that efficient dissolution is possible if all agents valuations at their types where gains of trade are minimal are equal: For this to hold, the agent that most likely has the highest valuation for a given asset should initially own a bigger share of that asset. We discuss implications of these findings for the design of partnerships and joint ventures.

Keywords: efficient mechanism design, multiple units, partnerships.

JEL Classification: C72, D82, L14

Suggested Citation

Skreta, Vasiliki and Figueroa, Nicolas, What to Put on the Table (Aug, 2007). Available at SSRN: https://ssrn.com/abstract=1120987 or http://dx.doi.org/10.2139/ssrn.1120987

Vasiliki Skreta (Contact Author)

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

HOME PAGE: http://vskreta.wixsite.com/vskreta

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

HOME PAGE: http://vskreta.wixsite.com/vskreta

Nicolas Figueroa

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

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