Generic efficiency and collusion-proofness in exchange economies

Giraud, Gaël and Rochon, Céline (2003) Generic efficiency and collusion-proofness in exchange economies. Social Choice and Welfare, 20 (3). pp. 405-428.


The purpose of this paper is to study the kind of efficient allocations that can be achieved in exchange economies with asymmetric information, by means of a decentralized mechanism robust to coalitional, strategic deviations. To this end, we define a new strategic equilibrium concept - called strong collusion-proof contract - designed to characterize stable communication agreements in games with differential information against non-binding, self-enforcing and incentive compatible deviations by coalitions. We then construct a strategic market mechanism which, for quasi-linear economies, is such that its strong collusion-proof contracts generically induce the incentive compatible interim efficient allocations. Moreover, we show that these allocations can be achieved by strong collusion-proof contracts. We show that the internally consistent extension of the strong collusion-proof contracts generically yields the same set of efficient allocations.

Item Type: Article
Keywords: Coalition-proofness; Bayesian implementation; Communication equilibrium; Interim efficiency; finance
Subject(s): Finance
Date Deposited: 12 Mar 2012 20:04
Last Modified: 27 Feb 2017 10:07
Funders: N/A

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