Informational smallness and the scope for limiting information rents
For an incomplete-information model of public-good provision with interim participation constraints, we show that efficient outcomes can be approximated, with approximately full surplus extraction, when there are many agents and each agent is informationally small. The result holds even if agents' payoffs cannot be unambiguously inferred from their beliefs. The contrary result of Neeman [Z. Neeman, The relevance of private information in mechanism design, J. Econ. Theory 117 (2004) 55-77] rests on an implicit uniformity requirement that is incompatible with the notion that agents are informationally small because there are many other agents who have information about them.
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- Aviad Heifetz & Zvika Neeman, 2004.
"On the Generic (Im)possibility of Full Surplus Extraction in Mechanism Design,"
Discussion Paper Series
dp350, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Aviad Heifetz & Zvika Neeman, 2006. "On the Generic (Im)Possibility of Full Surplus Extraction in Mechanism Design," Econometrica, Econometric Society, vol. 74(1), pages 213-233, 01.
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Penn CARESS Working Papers
7f6ff09d59945e06909ce4fa4, Penn Economics Department.
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- Miller, Nolan H. & Pratt, John W. & Zeckhauser, Richard J. & Johnson, Scott, 2007.
"Mechanism design with multidimensional, continuous types and interdependent valuations,"
Journal of Economic Theory,
Elsevier, vol. 136(1), pages 476-496, September.
- Miller, Nolan & Pratt, John H. & Zeckhauser, Richard & Johnson, Scott, 2006. "Mechanism Design with Multidimensional, Continuous Types and Interdependent Valuations," Working Paper Series rwp06-028, Harvard University, John F. Kennedy School of Government.
- Neeman, Z., 1998.
"The Relevance of Private Infromation in Mechanism Design,"
93, Boston University - Department of Economics.
- Neeman, Zvika, 2004. "The relevance of private information in mechanism design," Journal of Economic Theory, Elsevier, vol. 117(1), pages 55-77, July.
- Zvika Neeman, 1998. "The Relevance of Private Information in Mechanism Design," Papers 0093, Boston University - Industry Studies Programme.
- Palfrey, Thomas R. & Srivastava, Sanjay, 1986. "Private information in large economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 34-58, June.
- Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
- Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-1257, November.
- McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, vol. 60(2), pages 395-421, March.
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