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Efficiency and Mechanisms with no Regret
International Economic Review
Vol. 33, No. 1 (Feb., 1992), pp. 45-59
Published by: Wiley for the Economics Department of the University of Pennsylvania and Institute of Social and Economic Research, Osaka University
Stable URL: http://www.jstor.org/stable/2526982
Page Count: 15
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Can we always design a game form so that all its Bayesian equilibrium outcomes are either interim individually rational efficient or interim envy-free efficient in asymmetric information economies? We show that the answer is no. Given that such games exist in complete information economies, can this gap be filled by games that leak information endogenously without enlarging the equilibrium set? We adopt two approaches. First, we introduce a theory of "cheap play" as a natural model of such games. The second is an extreme approach that adopts an hex post viewpoint. Neither yields a possibility result. Information leakage does not recover efficiency.
International Economic Review © 1992 Economics Department of the University of Pennsylvania