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Information acquisition and full surplus extraction

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  • Bikhchandani, Sushil

Abstract

It is well known that when agents' types are correlated, the mechanism designer can extract the entire surplus. This creates an incentive for agents to acquire information about other agents' types. Robust lotteries (are payment schemes that) support full extraction and partially robust lotteries support efficient implementation in the presence of information acquisition opportunities. Necessary and sufficient conditions for existence of robust and partially robust lotteries are derived. If an agent's information signal spans other agents' types then robust lotteries do not exist. However, if all agents report their signal realizations then robust lotteries exist in an extended type space.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 145 (2010)
Issue (Month): 6 (November)
Pages: 2282-2308

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Handle: RePEc:eee:jetheo:v:145:y:2010:i:6:p:2282-2308

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Web page: http://www.elsevier.com/locate/inca/622869

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Keywords: Full surplus extraction Information acquisition Mechanism design;

References

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Cited by:
  1. Krähmer, Daniel, 2012. "Auction design with endogenously correlated buyer types," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(1), pages 118-141.

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