Informational Smallness and the Scope for Limiting Information Rents

Alia Gizatulina () and Martin Hellwig
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Alia Gizatulina: Max Planck Institute for Research on Collective Goods

No 2009_28, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: For an incomplete-information model of public-good provision with interim participation constraints, we show that e¢ cient outcomes can be approximated, with approximately full surplus extraction, when there are many agents and each agent is informationally small. The result holds even if agents' payoffs cannot be unambiguously inferred from their beliefs, i.e., even if the so-called BDP property ("Beliefs Determine Preferences") of Neeman (2004) does not hold. The contrary result of Neeman (2004) rests on an implicit uniformity requirement that is incompatible with the notion that agents are informationally small because there are many other agents who have information about them.

Keywords: surplus extraction; mechanism design; BDP; informational smallness; correlated information (search for similar items in EconPapers)
JEL-codes: D40 D44 D80 D82 (search for similar items in EconPapers)
Date: 2009-08
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Journal Article: Informational smallness and the scope for limiting information rents (2010)
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