Individually Rational, Balanced-Budget Bayesian Mechanisms and the Informed Principal Problem
AbstractWe investigate the issue of implementation via individually rational ex-post budget-balanced Bayesian mechanisms. We demonstrate that all social choice rules that generate a nonnegative ex-ante surplus, including ex-post efficient ones, can generically be implemented via such mechanisms. The aggregate expected surplus in these mechanisms can be distributed in an arbitrary way. Also generically, any ex-post efficient social choice rule can be implemented in an informed principal framework, i.e. when the mechanism is offered by one of the informed parties. Only ex-post efficient social choice rules that allocate all surplus to the party designing the mechanism are both sequential equilibria and neutral optima, i.e. outcomes that can never be blocked
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 613.
Date of creation: 11 Aug 2004
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mechanism design; Bayesian implementation; surplus allocation; informed principal.;
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