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BEGIN:VEVENT
UID:4f1fae75e0b6fd24975d4c985ae175d7
CATEGORIES:Seminars
CREATED:20170418T180148
SUMMARY:Lunch Seminar: Guido Menzio - University of Pennsylvania
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Tough Middlemen (with Gregor Jarosh and Maryam Farboodi)\nAbstract:\nWe stu
 dy a decentralized asset market in the spirit of Duffie, Petersen and Garle
 anu (2005). We assume that agents are heterogeneous with respect to their v
 aluation of the asset, and with respect to their bargaining ability. Specif
 ically, a tough agent can make a take-it-or-leave it offer to the soft agen
 ts and (with probability 1/2) to another tough agent. A soft agent makes (w
 ith probability 1/2) a take-it-or-leave-it offer to another soft agent. In 
 this environment, we show that tough agents become intermediaries, in the s
 ense that a tough agent buys and sells the asset from a soft agent even whe
 n the two have the same valuation. We show that, in the presence of positiv
 e transaction costs, the non-fundamental trades carried out by tough agents
  are socially inefficient. We then show that, if tough agents cannot distin
 guish the identity of their trading partners (i.e. they post bid and ask pr
 ices), then intermediaries do not trade with each other even when they have
  different valuations. The unexecuted fundamental trades between tough agen
 ts are a second source of inefficiency. Finally, we show that—if agents can
  choose whether to pay a cost to become tough—the equilibrium involves mixi
 ng: a positive measure of agents is soft and a positive measure of agents i
 s tough.\n
DTSTAMP:20260407T141540Z
DTSTART:20160621T130000Z
DTEND:20160621T140000Z
SEQUENCE:0
TRANSP:OPAQUE
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