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Handbook of the Economics of Risk and Uncertainty
book

Handbook of the Economics of Risk and Uncertainty

by Mark Machina, W. Kip Viscusi
November 2013
Beginner content levelBeginner
896 pages
35h 10m
English
North Holland
Content preview from Handbook of the Economics of Risk and Uncertainty
Benjamin E. Hermalin
302
It is readily seen that the seller’s expected utility is positive—there are, in expectation,
positive gains to trade and these expected gains to trade equal the sum of the buyer’s
and seller’s expected utilities. To summarize:
Proposition 6.11. Assume buyer and seller wish to exchange the welfare-maximizing
quantity of some good, where the welfare-maximizing quantity depends on their types. Assume,
too, that the parties can enter into a contract prior to learning their types. Then a mechanism exists
that achieves first-best efficiency and is ex ante individually rational for both parties. An example
of such a mechanism ...
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Publisher Resources

ISBN: 9780444536853