Refinements and incentive efficiency in Walrasian models of insurance economies

Alessandro Citanna and Paolo Siconolfi

Journal of Mathematical Economics, 2014, vol. 50, issue C, 208-218

Abstract: The literature on Walrasian markets in large economies with adverse selection has used various equilibrium refinements, but has obtained no general incentive efficiency of equilibrium, namely when cross-subsidies are needed for efficiency. We show that the same refined equilibria may also be incentive inefficient even when general mechanisms that allow for such cross-subsidies are priced and can be traded. In the process, we also prove existence of some type of forward induction equilibria in this context.

Keywords: Walrasian markets; Adverse selection; Refinements; Mechanisms (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:50:y:2014:i:c:p:208-218

DOI: 10.1016/j.jmateco.2013.12.007

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