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On the Generic (Im)possibility of Full Surplus Extraction in Mechanism Design

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  • Aviad Heifetz

    ()

  • Zvika Neeman

    ()

Abstract

A number of studies, most notably Cr?mer and McLean (1985, 1988), have shown that in Harsanyi type spaces of a fixed finite size, it is generically possible to design mechanisms that extract all the surplus from players, and as a consequence, implement any outcome as if the players’ private information were commonly known. In contrast, we show that within the set of common priors on the universal type space, the subset of priors that permit the extraction of the players’ full surplus is shy. Shyness is a notion of smallness for convex subsets of infinite-dimensional topological vector spaces (in our case, the set of common priors), which generalizes the usual notion of zero Lebesgue measure in finite-dimensional spaces.

Suggested Citation

  • Aviad Heifetz & Zvika Neeman, 2004. "On the Generic (Im)possibility of Full Surplus Extraction in Mechanism Design," Discussion Paper Series dp350, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  • Handle: RePEc:huj:dispap:dp350
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    References listed on IDEAS

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    More about this item

    Keywords

    surplus extraction; information rents; mechanism design; private information; universal type space; genericity; prevalence;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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