{"ID":3004708,"CreatedAt":"2026-06-03T03:09:48.883664427Z","UpdatedAt":"2026-06-05T11:43:53.432517148Z","DeletedAt":null,"paper_url":"https://arxiv.org/abs/2606.03849","arxiv_id":"2606.03849","title":"Second-Best Bilateral Trade is $1/2$ Efficient","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 of the first-best gains from trade ($\\mathrm{SB}\\ge\\frac{1}{2}\\mathrm{FB}$). This result is tight, definitively closing the gap between the previously best-known bounds of $0.317$ and $0.736$.","short_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 impos...","url_abs":"https://arxiv.org/abs/2606.03849","url_pdf":"https://arxiv.org/pdf/2606.03849v1","authors":"[\"Zhengyang Liu\",\"Ying Qin\",\"Zeyu Ren\",\"Zihe Wang\"]","published":"2026-06-02T16:28:03Z","proceeding":"cs.GT","tasks":"[\"cs.GT\"]","methods":"[]","has_code":false}