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Local Independence, Monotonicity, Incentive Compatibility and Axiomatic Characterization of Price-Money Message Mechanism

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  • Ken Urai

    () (Graduate School of Economics, Osaka University)

  • Hiromi Murakami

    () (Faculty of Commerce, Doshisha University)

Abstract

To characterize money in a static economic model, it is known to be important to consider the agentcommodity double-infinity settings, i.e., the overlapping-generations framework. There does not seem to exist abundant literature, however, treating the axiomatic characterization problems for such monetary Walras allocations under the social choice and/or mechanism design settings. We show that the monetary Walras allocation for the economy with double infinities is characterized by weak Paretooptimality, individual rationality and local independence or the monotonicity, or the incentive compatibility conditions of social choice correspondence among the allocation mechanisms with messages under the category theoretic approach in Sonnenschein (1974). We utilize Sonnenschein fs market extension axiom for swamped economies that is closely related to the replica stability axiom of Thomson (1988). We can see how these conditions characterize the price-money message mechanism universally among a wide class of mechanisms, and efficiently in the sense that it has the minimal message spaces (pricemoney dictionary theorems). Moreover, by using the category theoretic framework, we can obtain the up-to-isomorphism uniqueness for such a dictionary object (isomorphism theorems).

Suggested Citation

  • Ken Urai & Hiromi Murakami, 2017. "Local Independence, Monotonicity, Incentive Compatibility and Axiomatic Characterization of Price-Money Message Mechanism," Discussion Papers in Economics and Business 17-08, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:1708
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    References listed on IDEAS

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    1. Esteban, J., 1986. "A characterization of the core in overlapping-generations economies," Journal of Economic Theory, Elsevier, vol. 39(2), pages 439-456, August.
    2. Shell, Karl, 1971. "Notes on the Economics of Infinity," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1002-1011, Sept.-Oct.
    3. Jordan, J. S., 1982. "The competitive allocation process is informationally efficient uniquely," Journal of Economic Theory, Elsevier, vol. 28(1), pages 1-18, October.
    4. Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
    5. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    6. Mount, Kenneth & Reiter, Stanley, 1974. "The informational size of message spaces," Journal of Economic Theory, Elsevier, vol. 8(2), pages 161-192, June.
    7. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    8. Esteban, J. & Millan, T., 1990. "Competitive equilibria and the core of overlapping generations economies," Journal of Economic Theory, Elsevier, vol. 50(1), pages 155-174, February.
    9. Balasko, Yves & Shell, Karl, 1980. "The overlapping-generations model, I: The case of pure exchange without money," Journal of Economic Theory, Elsevier, vol. 23(3), pages 281-306, December.
    10. Toshihiko Hayashi, 1976. "Monetary Equilibrium in Two Classes of Stationary Economies," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 269-284.
    11. Urai, Ken, 1994. "On the existence of equilibria in economies with infinitely many agents and commodities : The direct system of economies," Journal of Mathematical Economics, Elsevier, vol. 23(4), pages 339-359, July.
    12. Urai, Ken & Murakami, Hiromi, 2016. "Replica core equivalence theorem: An extension of the Debreu–Scarf limit theorem to double infinity monetary economies," Journal of Mathematical Economics, Elsevier, vol. 66(C), pages 83-88.
    13. Balasko, Yves & Shell, Karl, 1981. "The overlapping-generations model. II. The case of pure exchange with money," Journal of Economic Theory, Elsevier, vol. 24(1), pages 112-142, February.
    14. Sonnenschein, Hugo, 1974. "An Axiomatic Characterization of the Price Mechanism," Econometrica, Econometric Society, vol. 42(3), pages 425-433, May.
    15. Osana, Hiroaki, 1978. "On the informational size of message spaces for resource allocation processes," Journal of Economic Theory, Elsevier, vol. 17(1), pages 66-78, February.
    16. Ken Urai & Hiromi Murakami, 2015. "An Axiomatic Characterization of the Price-Money Message Mechanism," Discussion Papers in Economics and Business 15-31-Rev., Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Mar 2016.
    17. Thomson, William, 1988. "A study of choice correspondences in economies with a variable number of agents," Journal of Economic Theory, Elsevier, vol. 46(2), pages 237-254, December.
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    Citations

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    Cited by:

    1. Kohzo Shiraishi & Ken Urai & Hiromi Murakami, 2018. "Stability and Universal Implementability of the Price Mechanism," Discussion Papers in Economics and Business 18-16, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    2. Kohzo Shiraishi & Ken Urai & Hiromi Murakami, 2017. "Stability and Universal Implementability of the Price Mechanism," Discussion Papers in Economics and Business 17-09, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

    More about this item

    Keywords

    Resource Allocation Mechanism; Social Choice Correspondence; Overlapping-Generations Economy; Monetary Walras Allocation; Local Independence; Monotonicity; Incentive Compatibility; Universal Mapping Property;

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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