Generic efficiency and collusion-proofness in exchange economies
We define a newstrategic equilibrium concept - called strong collusion-proof contract - designed to characterize stable communication agreements in games with differential information against non-binding, selfenforcing and incentive compatible deviations by coalitions. We then construct a strategic market mechanism which, for quasi-linear economies, is such that its strong collusion-proof contracts generically induce the incentive compatible interim efficent allocations. Moreover, it is such that these allocations can be achieved by strong collusion-proof contracts. We show that the internally consistent extension of the strong collusion-proof contracts generically yields the same set of efficent allocations.
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