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Feasible Mechanisms in Economies with Type-Dependent Endowments

  • Françoise Forges

    ()

We propose two classes of allocation games for N.T.U. and T.U. exchange economies in which initial endowments and preferences depend on the agents’ private information. In both models, agents make non-verifiable claims about their types and effective deposits of consumption goods, which are redistributed by the planner. In a W-allocation game, the agents can withhold part of their endowment, namely consume whatever they do not deposit. In a D-allocation game, the agents can just destroypart of their endowment. W- and D- incentive compatible (I.C.) direct allocation mechanisms ask every agent to reveal his type and to make a deposit consistent with his reported type. The revelation principle holds in full generality for D-I.C. mechanisms but some care is needed for W-I.C. mechanisms. We further investigate the properties of both classes of mechanisms under common assumptions like non-exclusive information and/or constant aggregate endowment. In T.U. economies, W-I.C. and D-I.C. mechanisms are ex ante equivalent.

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File URL: http://hdl.handle.net/10.1007/s00355-006-0107-1
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Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 26 (2006)
Issue (Month): 2 (April)
Pages: 403-419

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Handle: RePEc:spr:sochwe:v:26:y:2006:i:2:p:403-419
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  1. McLean, Richard P. & Postlewaite, Andrew, 2003. "Informational size, incentive compatibility, and the core of a game with incomplete information," Games and Economic Behavior, Elsevier, vol. 45(1), pages 222-241, October.
  2. Forges, Françoise & Koessler, Frédéric, 2005. "Communication equilibria with partially verifiable types," Economics Papers from University Paris Dauphine 123456789/168, Paris Dauphine University.
  3. FORGES, Françoise & MINELLI, Enrico, . "A note on the incentive compatible core," CORE Discussion Papers RP -1523, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Lu Hong, 1996. "Bayesian implementation in exchange economies with state dependent feasible sets and private information," Social Choice and Welfare, Springer, vol. 13(4), pages 433-444.
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  8. Francoise Forges & Jean-Francois Mertens & Rajiv Vohra, 2002. "The Ex Ante Incentive Compatible Core in the Absence of Wealth Effects," Econometrica, Econometric Society, vol. 70(5), pages 1865-1892, September.
  9. Johnson, Scott & Pratt, John W & Zeckhauser, Richard J, 1990. "Efficiency Despite Mutually Payoff-Relevant Private Information: The Finite Case," Econometrica, Econometric Society, vol. 58(4), pages 873-900, July.
  10. Hong, Lu, 1998. "Feasible Bayesian Implementation with State Dependent Feasible Sets," Journal of Economic Theory, Elsevier, vol. 80(2), pages 201-221, June.
  11. Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Implementation with Incomplete Information in Exchange Economies," Econometrica, Econometric Society, vol. 57(1), pages 115-34, January.
  12. Postlewaite, Andrew, 1979. "Manipulation via Endowments," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 255-62, April.
  13. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March.
  14. Forges, Francoise & Minelli, Enrico & Vohra, Rajiv, 2002. "Incentives and the core of an exchange economy: a survey," Journal of Mathematical Economics, Elsevier, vol. 38(1-2), pages 1-41, September.
  15. Green, Jerry R & Laffont, Jean-Jacques, 1986. "Partially Verifiable Information and Mechanism Design," Review of Economic Studies, Wiley Blackwell, vol. 53(3), pages 447-56, July.
  16. Lu Hong & Scott Page, 1994. "Reducing informational costs in endowment mechanisms," Review of Economic Design, Springer, vol. 1(1), pages 103-117, December.
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