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The ex ante incentive compatible core in the absence of wealth effects

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  • FORGES, Françoise
  • MERTENS, Jean-François
  • VOHRA, Rajiv

Abstract

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 non-empty. However, we exhibit a wellbehaved exchange economy in which this core is empty, even if goods are allocated through random mechanisms.

Suggested Citation

  • FORGES, Françoise & MERTENS, Jean-François & VOHRA, Rajiv, 2001. "The ex ante incentive compatible core in the absence of wealth effects," LIDAM Discussion Papers CORE 2001001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2001001
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    More about this item

    Keywords

    Core; exchange economy; asymmetric information; incentive compatibility; ex ante; transferable utility; absence of wealth effects; quasi-linear;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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