Dissolving a partnership securely

Matt Van Essen, John Wooders

Research output: Contribution to journalArticle

Abstract

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.

Original languageEnglish (US)
Pages (from-to)415-434
Number of pages20
JournalEconomic Theory
Volume69
Issue number2
DOIs
StatePublished - Mar 1 2020

Keywords

  • Auction
  • Maximin
  • Partnerships

ASJC Scopus subject areas

  • Economics and Econometrics

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