Overcoming Participation Constraints
Cowles Foundation Discussion Paper No. 1511
Microeconomic Theory in Canada Paper No. 05-04-22-05-35-30
27 Pages Posted: 4 May 2005
There are 2 versions of this paper
Overcoming Participation Constraints
Date Written: May 2005
Abstract
In incomplete information environments with transferable utility, efficient outcomes are generally implementable unless interim or ex post participation constraints are imposed on the problem. In this paper we show that linking a sufficiently large number of independent but possibly unrelated social decisions, a slightly perturbed Groves mechanism can implement an efficient outcome with probability arbitrarily close to one, while respecting all participation, incentive and balanced budget constraints.
Note: An updated version of this abstract can be found at: http://ssrn.com/abstract=900425
Keywords: Participation constraints, efficiency, Groves mechanism, linking
JEL Classification: D61, D82, H41
Suggested Citation: Suggested Citation
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