On Non-responsiveness in Adverse Selection Models with Common Value
Abstract
In common value models, it is possible that the full information efficiency and the incentive constraint require the quantity of full and asymmetric information to move in opposite directions with the type. This conflict is called non-responsiveness. Most of those models share the features that when there is conflict, the optimal contract is pooling otherwise it is separating. In this note, we will show that, in fact, the robustness of the links between the conflict and separating contracts is not a general consequence of the common value models: it depends crucially on the assumption made in all those models that the principal's marginal benefit from trade with full information is not distorted by the presence of informational rents.
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Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Theoretical Economics.
Volume (Year): topics.3 (2003)
Issue (Month): 1 ()
Pages: 3
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Handle: RePEc:bpj:bejtec:v:topics.3:y:2003:i:1:n:3
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For corrections or technical questions regarding this item, or to correct its listing, contact: (Nickolas Zeibig-Kichas).
Related research
Keywords: non-responsiveness; implementability; mechanism design;Find related papers by JEL classification:
- D - Microeconomics
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Michael Kuhn, .
"Delegating Budgets when Agents Care About Autonomy,"
Discussion Papers
04/10, Department of Economics, University of York.
- Michael Kuhn, 2006. "Delegating budgets when agents care about autonomy," Thuenen-Series of Applied Economic Theory 69, University of Rostock, Institute of Economics, Germany.
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