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BEGIN:VEVENT
UID:4f1fae75e0b6fd24975d4c985ae175d7
CATEGORIES:Seminars
CREATED:20170418T180148
SUMMARY:Lunch Seminar: Guido Menzio - University of Pennsylvania
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:<p style="text-align: justify;"><strong>Tough Middlemen</strong> (with Greg
 or Jarosh and Maryam Farboodi)</p><p style="text-align: justify;">Abstract:
 </p><p style="text-align: justify;">We study a decentralized asset market i
 n the spirit of Duffie, Petersen and Garleanu (2005). We assume that agents
  are heterogeneous with respect to their valuation of the asset, and with r
 espect to their bargaining ability. Specifically, a tough agent can make a 
 take-it-or-leave it offer to the soft agents and (with probability 1/2) to 
 another tough agent. A soft agent makes (with probability 1/2) a take-it-or
 -leave-it offer to another soft agent. In this environment, we show that to
 ugh agents become intermediaries, in the sense that a tough agent buys and 
 sells the asset from a soft agent even when the two have the same valuation
 . We show that, in the presence of positive transaction costs, the non-fund
 amental trades carried out by tough agents are socially inefficient. We the
 n show that, if tough agents cannot distinguish the identity of their tradi
 ng partners (i.e. they post bid and ask prices), then intermediaries do not
  trade with each other even when they have different valuations. The unexec
 uted fundamental trades between tough agents are a second source of ineffic
 iency. Finally, we show that—if agents can choose whether to pay a cost to 
 become tough—the equilibrium involves mixing: a positive measure of agents 
 is soft and a positive measure of agents is tough.</p>
DTSTAMP:20260407T141554Z
DTSTART:20160621T130000Z
DTEND:20160621T140000Z
SEQUENCE:0
TRANSP:OPAQUE
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