Incentives and the existence of Pareto-optimal revelation

Abstract From the characterization of strongly and Bayesian incentive compatible Paretooptimal mechanisms with transferable utilities, we derive the following results. If there are only two types per individual then a strongly incentive compatible Paretooptimal mechanism exists. If there are only two individuals (with more than three types) then there are sets of beliefs (open in the class of all beliefs) for which no Bayesian incentive compatible Pareto-optimal mechanism exists. If there are more than two individuals then the class of beliefs for which such mechanisms exist is open and dense in the class of all beliefs.

[1]  Steven Vajda,et al.  The Theory of Linear Economic Models , 1960 .

[2]  Richard P. McLean,et al.  Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent , 1985 .

[3]  Howard Raiffa,et al.  Games And Decisions , 1958 .

[4]  Paul R. Milgrom,et al.  A theory of auctions and competitive bidding , 1982 .

[5]  C. d'Aspremont,et al.  Incentives and incomplete information , 1979 .

[6]  Jerry R. Green,et al.  Incentives in public decision-making , 1979 .

[7]  Eric Maskin,et al.  A Differential Approach to Expected Utility Maximizing Mechanisms , 1979 .

[8]  Roger B. Myerson,et al.  Bayesian Equilibrium and Incentive-Compatibility: An Introduction , 1983 .

[9]  J. Harsanyi.  Games with Incomplete Information Played by 'Bayesian' Players, Part III. The Basic Probability Distribution of the Game , 1968 .

[10]  K. Arrow.  The Property Rights Doctrine and Demand Revelation under Incomplete Information**This work was supported by National Science Foundation under Grant No. SOC75-21820 at the Institute for Mathematical Studies in the Social Sciences, Stanford University. , 1979 .

[11]  R. Myerson,et al.  Efficient and Durable Decision Rules with Incomplete Information , 1983 .

[12]  Martin P. Loeb,et al.  INCENTIVES AND PUBLIC INPUTS , 1975 .

[13]  Claude d'Aspremont,et al.  Bayesian incentive compatible beliefs , 1982 .

[14]  E. Maskin.  Optimal Bayesian Mechanisms , 1984 .

[15]  Robert B. Wilson.  Information, efficiency, and the core of an economy , 1978 .

[16]  H. Raiffa,et al.  Games and Decisions: Introduction and Critical Survey. , 1958 .

[17]  M. Walker.  On the Nonexistence of a Dominant Strategy Mechanism for Making Optimal Public Decisions , 1980 .

[18]  E. Maskin.  The Theory of Implementation in Nash Equilibrium: A Survey , 1983 .

[19]  Theodore Groves,et al.  Incentive Compatibility Ten Years Later , 1985 .