Value allocation under ambiguity

Angelos Angelopoulos and Leonidas Koutsougeras ()

Economic Theory, 2015, vol. 59, issue 1, 147-167

Abstract: We consider a pure exchange economy with asymmetric information where individual behavior exhibits ambiguity aversion along the line of maximin expected utility decision making. For such economies, we introduce different notions of maximin value allocations. We also introduce a strong notion of incentive compatibility. We prove the existence and incentive compatibility of the maximin value allocation. We conclude that unlike the Bayesian value allocation approach in Krasa Yannelis (Econometrica 62(4):881–900, 1994 ), incentive compatibility is related to efficiency rather than to direct exchange of information. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Asymmetric information; Maxmin value allocation; Incentive compatibility; Efficiency; D5; D81; D82; D86 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

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DOI: 10.1007/s00199-014-0812-4

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