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Dissolving a partnership efficiently. (English) Zbl 0632.90097
Summary: Several partners jointly own an asset that may be traded among them. Each partner has a valuation for the asset; the valuations are known privately and drawn independently from a common probability distribution. We characterize the set of all incentive-compatible and interim- individually-rational trading mechanisms, and give a simple necessary and sufficient condition for such mechanisms to dissolve the partnership ex post efficiently. A bidding game is constructed that achieves such dissolution whenever it is possible. Despite incomplete information about the valuation of the asset, a partnership can be dissolved ex post efficiently provided no single partner owns too large a share; this contrasts with Myerson and Satterthwaite’s result that ex post efficiency cannot be achieved when the asset is owned by a single party.

MSC:
91A12 Cooperative games
91B26 Auctions, bargaining, bidding and selling, and other market models
91B32 Resource and cost allocation (including fair division, apportionment, etc.)
91B50 General equilibrium theory
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