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The generic possibility of full surplus extraction in models with large type spaces

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  • Gizatulina, Alia
  • Hellwig, Martin

Abstract

McAfee and Reny (1992) have given a necessary and sufficient condition for full surplus extraction in naive type spaces with a continuum of payoff types. We generalize their characterization to arbitrary abstract type spaces and to the universal type space and show that in each setting, full surplus extraction is generically possible. We interpret the McAfee–Reny condition as a much stronger version of injectiveness of belief functions and prove genericity by arguments similar to those used to prove the classical embedding theorem for continuous functions. Our results can be used to also establish the genericity of common priors that admit full surplus extraction.

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  • Gizatulina, Alia & Hellwig, Martin, 2017. "The generic possibility of full surplus extraction in models with large type spaces," Journal of Economic Theory, Elsevier, vol. 170(C), pages 385-416.
    • Handle: RePEc:eee:jetheo:v:170:y:2017:i:c:p:385-416
    DOI: 10.1016/j.jet.2017.05.009
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    Cited by:

    1. Martin Hellwig, 2017. "Probability Measures on Product Spaces with Uniform Metrics," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2017_06, Max Planck Institute for Research on Collective Goods, revised May 2023.
    2. Guo, Huiyi, 2019. "Mechanism design with ambiguous transfers: An analysis in finite dimensional naive type spaces," Journal of Economic Theory, Elsevier, vol. 183(C), pages 76-105.
    3. Philippe Jehiel & Konrad Mierendorff, 2021. "Auction Design with Data-Driven Misspecifications," Papers 2107.00640, arXiv.org.
    4. Martin F. Hellwig, 2021. "Public-Good Provision with Macro Uncertainty about Preferences: Efficiency, Budget Balance, and Robustness," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2021_19, Max Planck Institute for Research on Collective Goods.

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    More about this item

    Keywords

    Mechanism design; Surplus extraction; Universal type space; Genericity; Correlated information; Strategic continuity;
    All these keywords.

    JEL classification:

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

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