Informational Size and Incentive Compatibility

We examine a general equilibrium model with asymmetrically informed agents. The presence of asymmetric information generally presents a conflict between incentive compatibility and Pareto efficiency. We present a notion of informational size and show that the conflict between incentive compatibility and efficiency can be made arbitrarily small if agents are of sufficiently small informational size. Copyright The Econometric Society 2002.

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Year of publication:	2002
Authors:	McLean, Richard ; Postlewaite, Andrew
Published in:	Econometrica. - Econometric Society. - Vol. 70.2002, 6, p. 2421-2453
Publisher:	Econometric Society

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005702082