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| Title: | | Ignorance is bliss: Rationality, information and equilibrium  |
| Authors: | | Barde, Sylvain |
| Issue Date: | | 2011 |
| Series/Report no.: | | School of Economics discussion papers 11,03 |
| Abstract: | | An information-theoretic thought experiment is developed to provide a methodology for predicting endowment distributions in the absence of information on agent preferences. The allocation problem is first presented as a stylised knapsack problem. Although this knapsack allocation is intractable, the social planner can nevertheless make precise predictions concerning the endowment distribution by using its information-theoretic structure. By construction these predictions do not rest on the rationality of agents. It is also shown, however, that the knapsack problem is equivalent to a congestion game under weak assumptions, which means that the planner can nevertheless evaluate the optimality of the unobserved allocation. |
| Subjects: | | Information theoretic measure knapsack problem congestion game potential function |
| JEL: | | C02 C62 D51 D83 |
| Document Type: | | Working Paper |
| Appears in Collections: | | School of Economics Discussion Papers, University of Kent
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