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The Ex Ante Incentive Compatible Core in the Absence of Wealth Effects

  • Francoise Forges

    ()

    (THEMA, Universite de Cergy-Pontoise, France)

  • Jean-Francois Mertens

    ()

    (CORE, Universite Catholique de Louvain, Louvain-la-Neuve, Belgique)

  • Rajiv Vohra

    ()

    (Brown University, Providence, U.S.A.)

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. Copyright The Econometric Society 2002.

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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 70 (2002)
Issue (Month): 5 (September)
Pages: 1865-1892

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Handle: RePEc:ecm:emetrp:v:70:y:2002:i:5:p:1865-1892
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