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Correlation, independence, and Bayesian incentives

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  • d ASPREMONT, Claude
  • CRÉMER, Jacques
  • GÉRARD-VARET, Louis-André
Abstract
Our goal is to describe the state of the art on Bayesian mechanisms when utility is transferable and only balanced transfers are admissible. New results will be proved along the way, but they will be integrated to the overall picture. We first study a condition on the information structure of the agents (condition B) which is necessary and sufficient to guarantee implementation of any decision rule. We prove constructively that condition B holds generically. We further analyze another condition (condition C), sufficient to guarantee implementation of any efficient decision rule and provide a simple interpretation. Also, we build a counterexample showing that condition C is not necessary to guarantee implementation of any efficient decision rule and then provide a necessary and sufficient condition. A counterexample is constructed to show that there does not always exist efficient Bayesian mechanisms, with three agents. Finally, we exhibit conditions on the information structures that guarantee unique implementation, and show that they hold generically.

Suggested Citation

  • d ASPREMONT, Claude & CRÉMER, Jacques & GÉRARD-VARET, Louis-André, 2003. "Correlation, independence, and Bayesian incentives," LIDAM Discussion Papers CORE 2003045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2003045
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    2. d'Aspremont, Claude & Cremer, Jacques & Gerard-Varet, Louis-Andre, 2004. "Balanced Bayesian mechanisms," Journal of Economic Theory, Elsevier, vol. 115(2), pages 385-396, April.
    3. Kosenok, Grigory & Severinov, Sergei, 2008. "Individually rational, budget-balanced mechanisms and allocation of surplus," Journal of Economic Theory, Elsevier, vol. 140(1), pages 126-161, May.
    4. Francoise Forges, 2006. "The Ex Ante Incentive Compatible Core in Exchange Economies with and without Indivisibilities," CESifo Working Paper Series 1686, CESifo.
    5. David K Levine & Andrea Mattozzi & Salvatore Modica, 2022. "Social Mechanisms and Political Economy: When Lobbyists Succeed, Pollsters Fail and Populists Win," Levine's Working Paper Archive 11694000000000148, David K. Levine.
    6. Drew Fudenberg & David K. Levine & Eric Maskin, 1996. "Balanced-Budget Mechanisms with Incomplete Information," Levine's Working Paper Archive 59, David K. Levine.
    7. Francoise Forges & Jean-Francois Mertens & Rajiv Vohra, 2002. "The Ex Ante Incentive Compatible Core in the Absence of Wealth Effects," Econometrica, Econometric Society, vol. 70(5), pages 1865-1892, September.
    8. Grüner, Hans Peter, 2008. "Public goods, participation constraints, and democracy: A possibility theorem," CEPR Discussion Papers 7066, C.E.P.R. Discussion Papers.

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