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Local incentive compatibility in non-convex type-spaces

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  • Roy, Souvik
  • Kumar, Ujjwal

Abstract

We explore the equivalence of local incentive compatibility (LIC) (Carroll (2012)) and incentive compatibility (IC) in non-convex type-spaces. We provide a sufficient condition on a type-space called minimal richness for the said equivalence. Using this result, we show that LIC and IC are equivalent on large class of non-convex type-spaces such as type-spaces perturbed by modularity and concave-modularity. The gross substitutes type-space and the generalized gross substitutes and complements type-space are important examples of type-spaces perturbed by modularity and concave-modularity, respectively. Finally, we provide a geometric property consisting of three conditions for the equivalence of LIC and IC, and show that all the conditions are indispensable.

Suggested Citation

  • Roy, Souvik & Kumar, Ujjwal, 2021. "Local incentive compatibility in non-convex type-spaces," MPRA Paper 110872, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110872
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    local incentive compatibility; (global) incentive compatibility; non-convex type-spaces; minimally rich type-spaces; gross substitutes type-space; generalized gross substitutes and complements type-space;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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