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Efficient allocations in economies with asymmetric information when the realized frequency of types is common knowledge

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  • Aristotelis Boukouras

    (University of Leicester)

  • Kostas Koufopoulos

    (Department of Banking and Financial Management)

Abstract

We consider a general economy, where agents have private information about their types. Types can be multidimensional and potentially interdependent. We show that, if the realized frequency of types (the exact number of agents for each type) is common knowledge, then a mechanism exists, which is consistent with truthful revelation of private information and which implements first-best allocations of resources as the unique equilibrium. The result requires the single-crossing property on utility functions and the anonymity of the Pareto correspondence.

Suggested Citation

  • Aristotelis Boukouras & Kostas Koufopoulos, 2017. "Efficient allocations in economies with asymmetric information when the realized frequency of types is common knowledge," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(1), pages 75-98, June.
    • Handle: RePEc:spr:joecth:v:64:y:2017:i:1:d:10.1007_s00199-016-0993-0
    DOI: 10.1007/s00199-016-0993-0
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    More about this item

    Keywords

    Adverse selection; First-best; Full implementation; Mechanism design; Single-crossing property;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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