Journal article
Ex ante efficiency implies incentive compatibility
Economic theory, Vol.36(1), pp.35-55
07/01/2008
DOI: 10.1007/s00199-007-0261-4
Abstract
We show that when agents become informationally negligible in a large economy with asymmetric information, every ex ante efficient allocation must be incentive compatible. This means that any ex ante core or Walrasian allocation is incentive compatible. The corresponding result is false for fixed finite-agent economies with asymmetric information. An example is also constructed to show that the ex post version of the result does not hold. Furthermore, we show that the result is sharp in the sense that it will fail to hold if one relaxes any of the main assumptions, namely, strong conditional independence on the information structure, strict concavity on the utility functions, type independence on the utility functions and endowments.
Details
- Title: Subtitle
- Ex ante efficiency implies incentive compatibility
- Creators
- Yeneng Sun - National University of SingaporeNicholas C. Yannelis - University of Illinois Urbana-Champaign
- Resource Type
- Journal article
- Publication Details
- Economic theory, Vol.36(1), pp.35-55
- Publisher
- Springer Nature
- DOI
- 10.1007/s00199-007-0261-4
- ISSN
- 0938-2259
- eISSN
- 1432-0479
- Number of pages
- 21
- Language
- English
- Date published
- 07/01/2008
- Academic Unit
- Economics
- Record Identifier
- 9984380416402771
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