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Overcoming Participation Constraints

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  • Fang, Hanming
  • Norman, Peter

Abstract

In incomplete information environments with transferable utility, efficient outcomes are generally implementable unless interim or ex post participation constraints are imposed on the problem. In this paper we show that linking a sufficiently large number of independent but possibly unrelated social decisions, a slightly perturbed Groves mechanism can implement an efficient outcome with probability arbitrarily close to one, while respecting all participation, incentive and balanced budget constraints.

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File URL: http://microeconomics.ca/peter_norman/dup_participationrevisionapril2005.pdf
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Bibliographic Info

Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number norman-05-04-22-05-35-30.

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Length: 24 pages
Date of creation: 22 Apr 2005
Date of revision: 28 Apr 2005
Handle: RePEc:ubc:pmicro:norman-05-04-22-05-35-30

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Web page: http://www.economics.ubc.ca/

Related research

Keywords: Linking; Approximate Efficiency; Groves Mechanism; Participation Constraints;

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References

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  1. Tilman Börgers & Peter Postl, 2008. "Efficient Compromising," Discussion Papers 06-11R, Department of Economics, University of Birmingham.
  2. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
  3. Peter Norman, 2004. "Efficient Mechanisms for Public Goods with Use Exclusions," Review of Economic Studies, Wiley Blackwell, vol. 71(4), pages 1163-1188, October.
  4. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
  5. Susan Athey & Ilya Segal, 2007. "An Efficient Dynamic Mechanism," Levine's Bibliography 122247000000001134, UCLA Department of Economics.
  6. Alessandra Casella, 2002. "Storable Votes," NBER Working Papers 9189, National Bureau of Economic Research, Inc.
  7. Spagnolo, Giancarlo, 2001. "Issue Linkage, Credible Delegation, and Policy Cooperation," CEPR Discussion Papers 2778, C.E.P.R. Discussion Papers.
  8. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
  9. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  10. Peter Norman, 2004. "Efficient Mechanisms for Public Goods with Use Exclusions," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1163-1188.
  11. Mailath, George J & Postlewaite, Andrew, 1990. "Asymmetric Information Bargaining Problems with Many Agents," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 351-67, July.
  12. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
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Citations

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Cited by:
  1. Hitoshi Matsushima & Koichi Miyazaki & Nobuyuki Yagi, 2010. "Role of Linking Mechanisms in Multitask Agency with Hidden Information," CIRJE F-Series CIRJE-F-721, CIRJE, Faculty of Economics, University of Tokyo.
  2. Hitoshi Matsushima & Koichi Miyazaki & Nobuyuki Yagi, 2006. "Role of Linking Mechanisms in Multitask Agency with Hidden Information ( Revised as CARF-F-209(2010) )," CARF F-Series CARF-F-059, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  3. Tilman Börgers & Peter Norman, 2009. "A note on budget balance under interim participation constraints: the case of independent types," Economic Theory, Springer, vol. 39(3), pages 477-489, June.
  4. Rafael Hortala-Vallve, 2007. "Inefficiencies on Linking Decisions," Economics Series Working Papers 321, University of Oxford, Department of Economics.
  5. Grüner, Hans Peter & Koriyama, Yukio, 2012. "Public goods, participation constraints, and democracy: A possibility theorem," Games and Economic Behavior, Elsevier, vol. 75(1), pages 152-167.
  6. Grüner, Hans Peter, 2008. "Public goods, participation constraints, and democracy: A possibility theorem," CEPR Discussion Papers 7066, C.E.P.R. Discussion Papers.

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