Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/221378 
Year of Publication: 
1993
Series/Report no.: 
Discussion Paper No. 1021
Publisher: 
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science, Evanston, IL
Abstract: 
We consider the allocation of goods in exchange economies with a finite number of agents who may have private information about their preferences. In such a setting, standard allocation rules such as Walrasian equilibria or rational expectations equilibria are not compatible with individual incentives. We characterize the set of allocations rules which are incentive compatible, or in other words, the set of strategy-proof social choice functions. The social choice functions which are strategy-proof are those which can be obtained from trading according to pre-specified proportions. The number of proportions which can be accommodated is proportional to the number of agents. Such rules are necessarily inefficient, even in the limit as the economy grows.
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.