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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 nonempty. However, we exhibit a well–behaved 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 Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/5454.

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Date of creation: 2002
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Publication status: Published in Econometrica, 2002, Vol. 70, no. 5
Handle: RePEc:dau:papers:123456789/5454

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Web page: http://www.dauphine.fr/en/welcome.html
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Keywords: Exchange economy; Core; quasi–linear; absence of wealth effects; transferable utility; ex ante; incentive compatibility; asymmetric information;

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  1. Francoise Forges & Enrico Minelli & Rajiv Vohra, 2000. "Incentives and the Core of an Exchange Economy: A Survey," Working Papers 2000-22, Brown University, Department of Economics.
  2. Forges, Francoise & Minelli, Enrico, 2001. "A Note on the Incentive Compatible Core," Journal of Economic Theory, Elsevier, vol. 98(1), pages 179-188, May.
  3. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
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  16. Johnson, Scott & Pratt, John W & Zeckhauser, Richard J, 1990. "Efficiency Despite Mutually Payoff-Relevant Private Information: The Finite Case," Econometrica, Econometric Society, vol. 58(4), pages 873-900, July.
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  20. d ASPREMONT, Claude & CRÉMER, Jacques & GÉRARD-VARET, Louis-André, 2003. "Correlation, independence, and Bayesian incentives," CORE Discussion Papers 2003045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  21. Ichiishi, Tatsuro & Idzik, Adam, 1996. "Bayesian Cooperative Choice of Strategies," International Journal of Game Theory, Springer, vol. 25(4), pages 455-73.
  22. Steven R. Williams, 1999. "A characterization of efficient, bayesian incentive compatible mechanisms," Economic Theory, Springer, vol. 14(1), pages 155-180.
  23. ALLEN, Beth, 1992. "Incentives in market games with asymmetric information: The core," CORE Discussion Papers 1992021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  24. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
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  27. Moulin, Herve, 1994. "Social choice," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 31, pages 1091-1125 Elsevier.
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