Information Aggregation and Adverse Selection
We consider a general economy, where agents have private information about their types. Types can be multi-dimensional and potentially interdependent. We show that, if the interim distribution of types is common knowledge (the exact number of agents for each type is known), then a mechanism exists, which is consistent with truthful revelation of private information and which implements first-best allocations of resources as the unique Bayes-Nash equilibrium. Our result requires weak restrictions on preferences (Local Non-Common Indiff erence Property) and on the Pareto correspondence (Anonymity) and it is robust to small perturbations regarding the knowledge of the interim distribution. Our paper is useful in understanding the power of information aggregation in alleviating incentive constraints and is particularly pertinent to games with large populations, in which case the interim distribution of types converges to a unique distribution.
|Date of creation:||20 Jan 2011|
|Contact details of provider:|| Postal: Platz der Goettinger Sieben 3; D-37073 Goettingen, GERMANY|
Phone: +49 551 39 14066
Fax: + 49 551 39 14059
Web page: http://www.uni-goettingen.de/en/82144.html
When requesting a correction, please mention this item's handle: RePEc:got:gotcrc:062. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dominik Noe)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.