Myerson-Satterthwaite Theorem
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Second-Best Bilateral Trade is $1/2$ Efficient
arXiv:2606.03849v1 Announce Type: new Abstract: The landmark Myerson-Satterthwaite Theorem establishes a fundamental impossibility in bilateral trade: no Bayesian incentive-compatible mechanism can simultaneously achieve ex-post efficiency, individual rationality, and strong budget balance. We resolve a long-standing open question regarding the efficiency loss imposed by these constraints. Specifically, we prove that the Bayesian-optimal (second-best) mechanism always captures at least half...