Journal article
Incentive compatibility under ambiguity
Economic theory, Vol.73(2-3), pp.565-593
04/01/2022
DOI: 10.1007/s00199-020-01304-x
Abstract
The paper examines notions of incentive compatibility in an environment with ambiguity-averse agents. In particular, we propose the notion of maxmin transfer coalitional incentive compatibility, which is immune to coalitional manipulations and thus more stable than the individual incentive compatibility condition. The main result characterizes the set of allocations that satisfy the maxmin transfer coalitional incentive compatibility condition. We show that an allocation satisfies maxmin transfer coalitional incentive compatibility if and only if it is maxmin interim efficient. This result extends that of De Castro and Yannelis (J Econ Theory 177:678-707, 2018) in the sense that ambiguity not only resolves the conflict between efficiency and incentive compatibility, it also accommodates stability. Furthermore, this result is false in a finite economy where agents are subjective expected utility maximizers.
Details
- Title: Subtitle
- Incentive compatibility under ambiguity
- Creators
- Huiyi Guo - Texas A&M UniversityNicholas C. Yannelis - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Economic theory, Vol.73(2-3), pp.565-593
- Publisher
- Springer Nature
- DOI
- 10.1007/s00199-020-01304-x
- ISSN
- 0938-2259
- eISSN
- 1432-0479
- Number of pages
- 29
- Language
- English
- Date published
- 04/01/2022
- Academic Unit
- Economics
- Record Identifier
- 9984380407802771
Metrics
1 Record Views