Veto Constraint in Mechanism Design: Inefficiency with Correlated Types - Archive ouverte HAL Access content directly
Journal Articles American Economic Journal: Microeconomics Year : 2009

Veto Constraint in Mechanism Design: Inefficiency with Correlated Types

(1, 2) , (1, 2, 3)
1
2
3

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.
Not file

Dates and versions

halshs-00754397 , version 1 (20-11-2012)

Identifiers

Cite

Olivier Compte, Philippe Jehiel. Veto Constraint in Mechanism Design: Inefficiency with Correlated Types. American Economic Journal: Microeconomics, 2009, 1 (1), pp.182-206. ⟨10.1257/mic.1.1.182⟩. ⟨halshs-00754397⟩
190 View
0 Download

Altmetric

Share

Gmail Facebook Twitter LinkedIn More