Selling procedures with private information and common values

The seller posted-price procedure is probably the most common method for making transactions in modern economies. The authors analyze the performance of posted pricing for transactions having significant common-value elements. In a model of two-sided private information, they characterize the fully revealing, perfect equilibrium offer strategy of the seller. The authors also characterize equilibrium behavior under two other pricing procedures-a sealed-bid procedure and a direct revelation mechanism. Finally, they examine the efficiency of these procedures and show that as the degree of common values increases, fewer mutually beneficial agreements are attained.