# Informed Principal Problems in Bilateral Trading

## TL;DR

This paper analyzes bilateral trade with interdependent values, focusing on the informed-principal problem, equilibrium characterization, and conditions for equilibrium uniqueness and stability.

## Contribution

It characterizes the worst-case equilibrium for principals and identifies conditions for equilibrium uniqueness in bilateral trade with interdependent values.

## Key findings

- Multiple equilibria exist with varying principal payoffs.
- The worst equilibrium for principals is characterized explicitly.
- Conditions for the uniqueness of equilibrium are established.

## Abstract

We study bilateral trade with interdependent values as an informed-principal problem. The mechanism-selection game has multiple equilibria that differ with respect to principal's payoff and trading surplus. We characterize the equilibrium that is worst for every type of principal, and characterize the conditions under which there are no equilibria with different payoffs for the principal. We also show that this is the unique equilibrium that survives the intuitive criterion.