(Almost) efficient mechanisms for bilateral trading

Liad Blumrosen*, Shahar Dobzinski

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


We study the bilateral trade problem: one seller, one buyer and a single, indivisible item for sale. It is well known that there is no fully-efficient and incentive compatible mechanism for this problem that maintains a balanced budget. We design simple and robust mechanisms that obtain approximate efficiency with these properties. We show that even minimal use of statistical data can yield good approximation results. We then demonstrate how a mechanism for this simple bilateral-trade problem can be used as a “black-box” for constructing mechanisms in more general environments. Finally, we show that dominant-strategy incentive-compatible mechanisms cannot guarantee any constant-factor approximation to the optimal gains from trade.

Original languageAmerican English
Pages (from-to)369-383
Number of pages15
JournalGames and Economic Behavior
StatePublished - Nov 2021

Bibliographical note

Funding Information:
We thank Akaki Mamageishvili for pointing out a mistake in a previous draft. Liad Blumrosen was supported by grants of The Israel Science Foundation (ISF) number 230/10 and 2570/19 . Shahar Dobzinski is supported by BSF grant 2016192 and ISF grant 2185/19 .

Publisher Copyright:
© 2021


  • Auctions
  • Bilateral trade
  • Budget balance
  • Double auctions
  • Mechanism design
  • Two-sided markets


Dive into the research topics of '(Almost) efficient mechanisms for bilateral trading'. Together they form a unique fingerprint.

Cite this