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Uncertainty, Efficiency and Incentive Compatibility

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  • Nabil I. Al-Najjar
  • Luciano De Castro
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    Abstract

    This note questions the behavioral content of second-order acts and their use in decision theoretic models. We show that there can be no verification mechanism to determine what the decision maker receives under a second-order act. This impossibility applies even in idealized repeated experiments where infinite data can be observed.

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    File URL: http://kellogg.northwestern.edu/faculty/decastro/htm/personal/maximin.pdf
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    Bibliographic Info

    Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1532.

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    Date of creation: 01 Dec 2010
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    Handle: RePEc:nwu:cmsems:1532

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    Web page: http://www.kellogg.northwestern.edu/research/math/
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    Cited by:
    1. Luciano Castro & Marialaura Pesce & Nicholas Yannelis, 2011. "Core and equilibria under ambiguity," Economic Theory, Springer, vol. 48(2), pages 519-548, October.
    2. Marta Faias & Carlos Hervés-Beloso & Emma Moreno-García, 2011. "Equilibrium price formation in markets with differentially informed agents," Economic Theory, Springer, vol. 48(1), pages 205-218, September.

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