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Informational Size and Incentive Compatibility

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  • Richard McLean
  • Andrew Postlewaite

Abstract

We examine a general equilibrium model with asymmetrically informed agents. The presence of asymmetric information generally presents a conflict between incentive compatibility and Pareto efficiency. We present a notion of informational size and show that the conflict between incentive compatibility and efficiency can be made arbitrarily small if agents are of sufficiently small informational size. Copyright The Econometric Society 2002.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

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  • Richard McLean & Andrew Postlewaite, "undated". "Informational Size and Incentive Compatibility," Penn CARESS Working Papers 7f6ff09d59945e06909ce4fa4, Penn Economics Department.
    • Handle: RePEc:cla:penntw:7f6ff09d59945e06909ce4fa4e11ae69
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    File URL: http://www.econ.upenn.edu/Centers/CARESS/CARESSpdf/99-14.pdf
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    References listed on IDEAS

    as
    1. Gul, Faruk & Postlewaite, Andrew, 1992. "Asymptotic Efficiency in Large Exchange Economies with Asymmetric Information," Econometrica, Econometric Society, vol. 60(6), pages 1273-1292, November.
    2. McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, vol. 60(2), pages 395-421, March.
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