Article ID Journal Published Year Pages File Type
5100110 Journal of Economic Theory 2017 16 Pages PDF
Abstract
This paper considers three solution concepts in a large private information economy, namely, Walrasian expectations equilibrium, private core, and insurance equilibrium. It shows that these three concepts coincide with each other when the agents are informationally negligible in such an economy. In contrast to the finite-agent setting, one can construct a large private information economy in which incentive compatibility fails completely in the sense that almost every agent in any Walrasian expectations equilibrium/private core/insurance equilibrium allocation has the incentive to misreport her type.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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