Individually Rational, Balanced-Budget Bayesian Mechanisms and the Informed Principal Problem

Grigory Kosenokand Sergei Severinov

No 613, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: We investigate the issue of implementation via individually rational ex-post budget-balanced Bayesian mechanisms. We demonstrate that all social choice rules that generate a nonnegative ex-ante surplus, including ex-post efficient ones, can generically be implemented via such mechanisms. The aggregate expected surplus in these mechanisms can be distributed in an arbitrary way. Also generically, any ex-post efficient social choice rule can be implemented in an informed principal framework, i.e. when the mechanism is offered by one of the informed parties. Only ex-post efficient social choice rules that allocate all surplus to the party designing the mechanism are both sequential equilibria and neutral optima, i.e. outcomes that can never be blocked

Keywords: mechanism design; Bayesian implementation; surplus allocation; informed principal. (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: http://EconPapers.repec.org/RePEc:ecm:nasm04:613

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