2022/04/30 by Yumou Fei, Fei, Yumou · 2 citations
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · #Auction Theory and Applications #Computer Science and Game Theory (cs.GT) #Consumer Market Behavior and Pricing #Data Structures and Algorithms (cs.DS) #Economic theories and models #FOS: Computer and information sciences #FOS: Economics and business #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2205.00140
openalex publication_date 2022/04/30 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We study the two-agent single-item bilateral trade. Ideally, the trade should happen whenever the buyer's value for the item exceeds the seller's cost. However, the classical result of Myerson and Satterthwaite showed that no mechanism can achieve this without violating one of the Bayesian incentive compatibility, individual rationality and weakly balanced budget conditions. This motivates the study of approximating the trade-whenever-socially-beneficial mechanism, in terms of the expected gains-from-trade. Recently, Deng, Mao, Sivan, and Wang showed that the random-offerer mechanism achieves at least a 1/8.23 approximation. We improve this lower bound to 1/3.15 in this paper. We also determine the exact worst-case approximation ratio of the seller-pricing mechanism assuming the distribution of the buyer's value satisfies the monotone hazard rate property.