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The Genericity of the McAfee-Reny Condition for Full Surplus Extraction in Models with a Continuum of Types

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  • Alia Gizatulina

    (Max Planck Institute for Research on Collective Goods)

  • Martin Hellwig

    (Max Planck Institute for Research on Collective Goods)

Abstract

McAfee and Reny (1992) have given a necessary and sufficient condition for full surplus extraction in models with a continuum of types. We interpret their condition as significantly stronger version of the requirement of injectiveness of the function mapping abstract types into beliefs and prove that their condition is satisfied by a generic set of model specifications. Our analysis involves an extension of the classical embedding theorem for continuous functions. Our proof does not rely on finite approximations and the topology on beliefs that we use is compatible with strategic continuity.

Suggested Citation

  • Alia Gizatulina & Martin Hellwig, 2015. "The Genericity of the McAfee-Reny Condition for Full Surplus Extraction in Models with a Continuum of Types," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_08, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2015_08
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    References listed on IDEAS

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    7. , & , & , & ,, 2010. "Uniform topologies on types," Theoretical Economics, Econometric Society, vol. 5(3), September.
    8. Gizatulina, Alia & Hellwig, Martin, 2014. "Beliefs, payoffs, information: On the robustness of the BDP property in models with endogenous beliefs," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 136-153.
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    Cited by:

    1. Martin Hellwig, 2015. "Financial Stability and Monetary Policy," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_10, Max Planck Institute for Research on Collective Goods.

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    More about this item

    Keywords

    Mechanism Design; surplus extraction; BDP; correlated information; strategic continuity;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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