Veto Constraint in Mechanism Design: Inefficiency with Correlated Types

Abstract : We consider bargaining problems in which parties have access to outside options, the size of the pie is commonly known and each party privately knows the realization of her outside option. We allow for correlations in the distributions of outside options. Parties have a veto right, which allows them to obtain at least their outside option payoff in any event. Besides, agents can receive no subsidy ex post. We show that inefficiencies are inevitable whatever the exact form of correlation, as long as private information is dispersed. We also illustrate how veto constraints differ from ex post participation constraints.
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Article dans une revue
American Economic Journal: Microeconomics, American Economic Association, 2009, 1 (1), pp.182-206. 〈10.1257/mic.1.1.182〉
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Soumis le : mardi 20 novembre 2012 - 09:37:32
Dernière modification le : jeudi 11 janvier 2018 - 06:19:17

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Olivier Compte, Philippe Jehiel. Veto Constraint in Mechanism Design: Inefficiency with Correlated Types. American Economic Journal: Microeconomics, American Economic Association, 2009, 1 (1), pp.182-206. 〈10.1257/mic.1.1.182〉. 〈halshs-00754397〉

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