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

Ken Urai () and Hiromi Murakami ()
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Ken Urai: Graduate School of Economics, Osaka University
Hiromi Murakami: Faculty of Commerce, Doshisha University

No 17-08, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

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).

Keywords: Resource Allocation Mechanism; Social Choice Correspondence; Overlapping-Generations Economy; Monetary Walras Allocation; Local Independence; Monotonicity; Incentive Compatibility; Universal Mapping Property (search for similar items in EconPapers)
JEL-codes: C60 D50 D51 D71 E00 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2017-04
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (2)

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