Advanced Search
MyIDEAS: Login to save this paper or follow this series

Veto Constraint in Mechanism Design: Inefficiency with Correlated Types

Contents:

Author Info

  • Olivier Compte
  • Philippe Jehiel

Abstract

We consider bargaining problems in which parties have access to outside options, the size of the pie is commonly known and each party privately knows the realization of her outside option. We allow for correlations in the distributions of outside options. Parties have a veto right, which allows them to obtain at least their outside option payoff in any event. Besides, agents can receive no subsidy ex post. We show that inefficiencies are inevitable whatever the exact form of correlation, as long as private information is dispersed. We also illustrate how veto constraints differ from ex post participation constraints. (JEL C78, D82)

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.enpc.fr/ceras/jehiel/veto.pdf
Download Restriction: no

Bibliographic Info

Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 321307000000000085.

as in new window
Length:
Date of creation: 05 Jun 2006
Date of revision:
Handle: RePEc:cla:levrem:321307000000000085

Contact details of provider:
Web page: http://www.dklevine.com/

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. F. Forges., 1998. "Ex post individually rational trading mechanisms," THEMA Working Papers, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise 98-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  2. Mailath, George J & Postlewaite, Andrew, 1990. "Asymmetric Information Bargaining Problems with Many Agents," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 351-67, July.
  3. Aviad Heifetz & Zvika Neeman, 2004. "On the Generic (Im)possibility of Full Surplus Extraction in Mechanism Design," Discussion Paper Series, The Center for the Study of Rationality, Hebrew University, Jerusalem dp350, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  4. Green, Jerry R & Laffont, Jean-Jacques, 1987. "Posterior Implementability in a Two-Person Decision Problem," Econometrica, Econometric Society, Econometric Society, vol. 55(1), pages 69-94, January.
  5. Steven R. Williams & Georgia Kosmopoulou, 1998. "The robustness of the independent private value model in Bayesian mechanism design," Economic Theory, Springer, Springer, vol. 12(2), pages 393-421.
  6. Matsuo, Toshihide, 1989. "On incentive compatible, individually rational, and ex post efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, Elsevier, vol. 49(1), pages 189-194, October.
  7. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Pesendorfer, Martin, 1998. "Pollution Claim Settlements under Correlated Information," Journal of Economic Theory, Elsevier, Elsevier, vol. 79(1), pages 72-105, March.
  9. Neeman, Z., 1998. "The Relevance of Private Infromation in Mechanism Design," Papers, Boston University - Department of Economics 93, Boston University - Department of Economics.
  10. Green, Jerry R & Laffont, Jean-Jacques, 1986. "Partially Verifiable Information and Mechanism Design," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(3), pages 447-56, July.
  11. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, Econometric Society, vol. 56(6), pages 1247-57, November.
  12. Gresik, Thomas A., 1991. "Ex ante efficient, ex post individually rational trade," Journal of Economic Theory, Elsevier, Elsevier, vol. 53(1), pages 131-145, February.
  13. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
  14. Matthews, Steven A. & Postlewaite, Andrew, 1989. "Pre-play communication in two-person sealed-bid double auctions," Journal of Economic Theory, Elsevier, Elsevier, vol. 48(1), pages 238-263, June.
  15. Jean-Jacques Laffont & David Martimort, 2000. "Mechanism Design with Collusion and Correlation," Econometrica, Econometric Society, Econometric Society, vol. 68(2), pages 309-342, March.
  16. McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, Econometric Society, vol. 60(2), pages 395-421, March.
  17. Robert, Jacques, 1991. "Continuity in auction design," Journal of Economic Theory, Elsevier, Elsevier, vol. 55(1), pages 169-179, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Stefano Galavotti & Nozomu Muto & Daisuke Oyama, 2011. "On efficient partnership dissolution under ex post individual rationality," Economic Theory, Springer, Springer, vol. 48(1), pages 87-123, September.
  2. Mark Fey & Kristopher Ramsay, 2009. "Mechanism design goes to war: peaceful outcomes with interdependent and correlated types," Review of Economic Design, Springer, Springer, vol. 13(3), pages 233-250, September.
  3. Martimort, David & Semenov, Aggey & Stole, Lars, 2014. "A Theory of Contracts With Limited Enforcement," MPRA Paper 53504, University Library of Munich, Germany.
  4. Saran, Rene, 2011. "Bilateral trading with naive traders," Games and Economic Behavior, Elsevier, Elsevier, vol. 72(2), pages 544-557, June.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cla:levrem:321307000000000085. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David K. Levine).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.