Finance Seminar（2017-03）

Topic: Efficient Bargaining Through a Broker

Speaker: Xingtan Zhang, The Wharton School of the University of Pennsylvania

Time: Wednesday, 22 February, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract:

A partially informed broker, acting as an intermediary between a buyer and seller, can improve welfare by alleviating inefficiencies caused by asymmetric information. I provide a sufficient condition on the broker’s information to achieve an efficient outcome, in contrast to the Myerson and Satterthwaite (1983) theorem, which states that direct bilateral bargaining is generally inefficient. In the broker’s optimal mechanism, while a more informed broker extracts a higher surplus, trade is still more efficient; consequently, the buyer and seller can be better off trading with a more informed broker. (JEL Code: D82, G23, L12)

Introduction:

Xingtan Zhang is a Ph.D. candidate in Applied Economics at the Wharton School of the University of Pennsylvania. His interest is information economics. He holds a B.S. in Mathematics from Peking University.

//sites.google.com/site/xingtanzhang

Your participation is warmly welcomed!