CONSTRAINED EFFICIENT MARKETS FOR MANIPULATION ECONOMIES

Alex Citanna, Paolo Siconolfi

Research output: Contribution to journalArticlepeer-review

Abstract

We design a competitive market for exclusive contracts in large economies with observable types where trades are subject to postcontractual manipulations. We do not impose quantity restrictions at the trading stage—for example, incentive constraints on the consumption or production sets. We establish existence and constrained optimality of equilibrium. Our design can accommodate manipulations stemming from private information as well as from behavioral biases—for example, time inconsistency and false beliefs. We discuss the needed size and complexity of the commodity set.

Original languageEnglish (US)
Pages (from-to)1531-1567
Number of pages37
JournalInternational Economic Review
Volume61
Issue number4
DOIs
StatePublished - Nov 2020

ASJC Scopus subject areas

  • Economics and Econometrics

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