Refinements and incentive efficiency in Walrasian models of insurance economies

Alessandro Citanna, Paolo Siconolfi

Research output: Contribution to journalArticle


The literature on Walrasian markets in large economies with adverse selection has used various equilibrium refinements, but has obtained no general incentive efficiency of equilibrium, namely when cross-subsidies are needed for efficiency. We show that the same refined equilibria may also be incentive inefficient even when general mechanisms that allow for such cross-subsidies are priced and can be traded. In the process, we also prove existence of some type of forward induction equilibria in this context.

Original languageEnglish (US)
Pages (from-to)208-218
Number of pages11
JournalJournal of Mathematical Economics
Issue number1
StatePublished - Jan 2014


  • Adverse selection
  • Mechanisms
  • Refinements
  • Walrasian markets

ASJC Scopus subject areas

  • Economics and Econometrics
  • Applied Mathematics

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