Smart Contracting in Network Markets

Mar 8, 2026

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With complete-information bilateral bargaining in network settings, holdup is eliminated when contracts across the network are agreed atomically (all or none) via a smart contract. Applications include over-the-counter trading, syndicated lending, multi-tranche securitizations, third-party financed purchases, and bookbuilding. Under a novel extensive-form bargaining protocol, any firm can give a “greenlight” to the terms of a contract proposed to that firm, which automatically converts those terms into a binding contract if the terms proposed to all other firms also receive greenlights. In any Perfect Bayesian Equilibrium with Markov strategies, firms immediately agree on socially efficient contracts that equalize expected gains across firms.


Darrell Duffie

Darrell Duffie

Stanford University

Chaojun Wang

Chaojun Wang

University of Pennsylvania