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Efficient allocations in economies with asymmetric information when the realized frequency of types is common knowledge

Aristotelis Boukouras () and Kostas Koufopoulos ()
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Aristotelis Boukouras: University of Leicester
Kostas Koufopoulos: Department of Banking and Financial Management

Economic Theory, 2017, vol. 64, issue 1, 75-98

Abstract: Abstract We consider a general economy, where agents have private information about their types. Types can be multidimensional and potentially interdependent. We show that, if the realized frequency of types (the exact number of agents for each type) is common knowledge, then a mechanism exists, which is consistent with truthful revelation of private information and which implements first-best allocations of resources as the unique equilibrium. The result requires the single-crossing property on utility functions and the anonymity of the Pareto correspondence.

Keywords: Adverse selection; First-best; Full implementation; Mechanism design; Single-crossing property (search for similar items in EconPapers)
JEL-codes: D71 D82 D86 (search for similar items in EconPapers)
Date: 2017
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