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Correlation, independence, and Bayesian incentives

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  • d ASPREMONT, Claude
  • CRÉMER, Jacques
  • GÉRARD-VARET, Louis-André

Abstract

Our goal is to describe the state of the art on Bayesian mechanisms when utility is transferable and only balanced transfers are admissible. New results will be proved along the way, but they will be integrated to the overall picture. We first study a condition on the information structure of the agents (condition B) which is necessary and sufficient to guarantee implementation of any decision rule. We prove constructively that condition B holds generically. We further analyze another condition (condition C), sufficient to guarantee implementation of any efficient decision rule and provide a simple interpretation. Also, we build a counterexample showing that condition C is not necessary to guarantee implementation of any efficient decision rule and then provide a necessary and sufficient condition. A counterexample is constructed to show that there does not always exist efficient Bayesian mechanisms, with three agents. Finally, we exhibit conditions on the information structures that guarantee unique implementation, and show that they hold generically.

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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 2003045.

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Date of creation: 00 Jun 2003
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Handle: RePEc:cor:louvco:2003045

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Citations

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Cited by:
  1. d'Aspremont, Claude & Cremer, Jacques & Gerard-Varet, Louis-Andre, 2004. "Balanced Bayesian mechanisms," Journal of Economic Theory, Elsevier, vol. 115(2), pages 385-396, April.
  2. Dirk Bergemann & Stephen Morris, 2003. "Robust Mechanism Design," Levine's Bibliography 666156000000000035, UCLA Department of Economics.
  3. Grüner, Hans Peter, 2008. "Public goods, participation constraints, and democracy: A possibility theorem," CEPR Discussion Papers 7066, C.E.P.R. Discussion Papers.
  4. Francoise Forges & Jean-Francois Mertens & Rajiv Vohra, 2001. "The Ex Ante Incentive Compatible Core in the absence of wealth effects," Working Papers 2001-01, Brown University, Department of Economics.
  5. Drew Fudenberg & David K. Levine & Eric Maskin, 1996. "Balanced-Budget Mechanisms with Incomplete Information," Levine's Working Paper Archive 59, David K. Levine.
  6. Kosenok, Grigory & Severinov, Sergei, 2008. "Individually rational, budget-balanced mechanisms and allocation of surplus," Journal of Economic Theory, Elsevier, vol. 140(1), pages 126-161, May.
  7. Francoise Forges, 2006. "The Ex Ante Incentive Compatible Core in Exchange Economies with and without Indivisibilities," CESifo Working Paper Series 1686, CESifo Group Munich.

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