Improved Approximation to First-Best Gains-from-Trade

We study the two-agent single-item bilateral trade. Ideally, the trade should happen whenever the buyer's value for the item exceeds the seller's cost. However, the classical result of Myerson and Satterthwaite showed that no mechanism can achieve this without violating one of the Bayesian incentive compatibility, individual rationality and weakly balanced budget conditions. This motivates the study of approximating the trade-whenever-socially-beneficial mechanism, in terms of the expected gains...