SELLING PROCEDURES WITH PRIVATE INFORMATION AND COMMON VALUES

The seller posted-price procedure is probably the most common method f or making transactions in modern economies. We analyze the performance of posted pricing for transactions having significant common-value el ements. In a model of two-sided private information, we characterize t he fully revealing, perfect equilibrium offer strategy of the seller. We also characterize equilibrium behavior under two other pricing proc edures-a sealed-bid procedure and a direct revelation mechanism. Final ly, we examine the efficiency of these procedures and show that as the degree of common values increases, fewer mutually beneficial agreemen ts are attained.