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Inefficiencies on Linking Decisions

Rafael Hortala-Vallve

No 321, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Jackson and Sonnenschein (2006) show that by linking collective decisions the incentive costs can become negligible and, at the limit, ex-ante efficiency can be achieved. In a voting situation this implies that the agents` intensity of preferences can be taken into account even in the absence of monetary transfers. Rather than considering a limiting result we want to analyse what can be achieved while we consider a finite number of linked decisions. We first characterise the set of implementable mechanisms and show that ex-ante efficiency can never be achieved. We then proceed to relax the efficiency requirement and prove that, even when we just require unanimity, the mechanism cannot be sensitive to the agents` intensity of preference.

Keywords: Linking Decisions; Mechanism Design; Multidimensional Screening; Strategy-Proofness; Intensity Problem; Separable Preferences (search for similar items in EconPapers)
JEL-codes: C72 D70 D80 (search for similar items in EconPapers)
Date: 2007-04-01
New Economics Papers: this item is included in nep-cdm
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