Dissolving a partnership securely
- Publisher:
- Springer (part of Springer Nature)
- Publication Type:
- Journal Article
- Citation:
- Economic Theory, 2019, 69, (2), pp. 415-434
- Issue Date:
- 2019-01-01
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Essen-Wooders2020_Article_DissolvingAPartnershipSecurely.pdf | Published version | 419.86 kB |
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© 2019, Springer-Verlag GmbH Germany, part of Springer Nature. We characterize security strategies and payoffs for three mechanisms for dissolving partnerships: the Texas Shoot-Out, the K+ 1 auction, and the compensation auction. A security strategy maximizes a participant’s minimum payoff, and represents a natural starting point for analysis when a participant is either uncertain of the environment or uncertain of whether his rivals will play equilibrium. For the compensation auction, a dynamic dissolution mechanism, we introduce the notion of a perfect security strategy. Such a strategy maximizes a participant’s minimum payoff along every path of play. We show that while a player has many security strategies in the compensation auction, he has a unique perfect security strategy.
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