Mechanism Design with Limited Commitment

A Mechanism Design Model of Firm Dynamics: The Case of Limited Commitment

SSRN Electronic Journal ◽

10.2139/ssrn.2347821 ◽

2013 ◽

Cited By ~ 16

Author(s):

Hengjie Ai ◽

Dana Kiku ◽

Rui Li

Keyword(s):

Mechanism Design ◽

Firm Dynamics ◽

Design Model ◽

Limited Commitment

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Dynamic Mechanism Design with Budget Constrained Buyers Under Limited Commitment

SSRN Electronic Journal ◽

10.2139/ssrn.2720355 ◽

2016 ◽

Cited By ~ 1

Author(s):

Santiago Balseiro ◽

Omar Besbes ◽

Gabriel Y. Weintraub

Keyword(s):

Mechanism Design ◽

Dynamic Mechanism ◽

Limited Commitment ◽

Dynamic Mechanism Design

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Bilateral trade with a benevolent intermediary

Theoretical Economics ◽

10.3982/te3703 ◽

2021 ◽

Vol 16 (4) ◽

pp. 1655-1714

Author(s):

Ran Eilat ◽

Ady Pauzner

Keyword(s):

Objective Function ◽

Mechanism Design ◽

Design Problem ◽

Bilateral Trade ◽

Limited Commitment ◽

Gains From Trade ◽

Bilateral Negotiations ◽

Available Information

We study intermediaries who seek to maximize gains from trade in bilateral negotiations. Intermediaries are players: they cannot commit to act against their objective function and deny, in some cases, trade they believe to be beneficial. This impairs their ability to assist the parties relative to conventional mechanisms. We analyze this limited commitment environment as a standard mechanism design problem with an additional “credibility” constraint, requiring that every outcome be interim‐optimal conditional on available information. We investigate how such intermediaries communicate with the parties, analyze the tradeoffs they face, and study the bounds on what they can achieve.

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