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The ex ante incentive compatible core in the absence of wealth effects

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  • FORGES, Françoise
  • MERTENS, Jean-François
  • VOHRA, Rajiv

Abstract

In a differential information economy with quasi-linear utilities, monetary transfers facilitate the fulfillment of incentive compatibility constraints: the associated ex ante core is generically non-empty. However, we exhibit a wellbehaved exchange economy in which this core is empty, even if goods are allocated through random mechanisms.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001001.

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Date of creation: 00 Jan 2001
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Handle: RePEc:cor:louvco:2001001

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Keywords: Core; exchange economy; asymmetric information; incentive compatibility; ex ante; transferable utility; absence of wealth effects; quasi-linear;

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