SSS can be fully implemented in perfect Bayesian equilibrium. However, in the case of dependent prior distribution of agents' types, we show that this result cannot hold. Hence, we suggest the sufficient condition for implementation." />
Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Implementation of Allocation Rule with Strict Self-Selection

Vol.16, No.1, March , 33–52



  •   (Head researcher, KT Marketing Institute)

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Abstract  

This paper deals with the Bayesian implementation of an allocation rule in an environment with quasi-linear preferences. We analyze the implementation under the assumption that the principal does not know the prior distribution of agents' types, though the distribution is common knowledge among agents. Assuming that the agents' types are independent prior distributions, we show that an allocation rule with SSS can be fully implemented in perfect Bayesian equilibrium. However, in the case of dependent prior distribution of agents' types, we show that this result cannot hold. Hence, we suggest the sufficient condition for implementation.


Keywords
   Implementation, Allocation Rule, Strict Self-selection

JEL classification codes
   D78, D82
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