It is shown with an example that, in bilateral trade problems with two-sided incomplete information, some seller types may obtain higher expected payoffs in mechanisms other than the one where they make a take-it-or-leave-it offer, contrary to popular belief. If one looks at the mechanism selection problem of the (informed) seller, then the optimality of a take-it-or-leave-it offer for the seller is restored. Journal of Economic Literature Classification Numbers: C72, C78, D82.
ASJC Scopus subject areas
- Economics and Econometrics