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Title:Existence of Efficient Mechanisms in Bilateral Trade Models: The Effects of Different Distributions of Types, Preferences and Initial Endowments
Author(s):Oliveira, Andre Rossi
Doctoral Committee Chair(s):Williams, Steven R.
Department / Program:Economics
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Economics, Theory
Abstract:In a model of bilateral trade with continuous quantities and quasilinear utilities, a well-known necessary and sufficient condition for the existence of ex post efficient mechanisms satisfying Bayesian incentive compatibility, ex ante budget-balancing and interim individual rationality is reconsidered. This condition involves the comparison of the expected gains from trade of different types of agents, and therefore depends on their probability distributions. It also depends on the agents' initial endowments due to the requirement of individual rationality. This dissertation studies the issue of how different distributions of types and initial endowments affect this condition and therefore existence. It is first shown that mechanisms satisfying the conditions above exist when the likelihood of the types of agents that can achieve the highest gains from trade is sufficiently small. Conversely, non-existence is the outcome when the types that achieve the lowest gains from trade receive low probabilities. The result is interpreted in terms of the relationship between the expected revenue of the mechanism and the participation fees the agents are charged. It is then shown, for fixed probability distributions, that efficient mechanisms exist when the initial endowments are sufficiently distant from any efficient allocation, and that they don't exist when the initial endowments are close to the efficient allocation to the "worst off" types of agents.
Issue Date:1998
Description:88 p.
Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1998.
Other Identifier(s):(MiAaPQ)AAI9834723
Date Available in IDEALS:2015-09-25
Date Deposited:1998

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