Switching from complete to incomplete information

Research output: Contribution to journalArticlepeer-review

Abstract

We construct an elementary mechanism [Dutta, B., Sen, A., Vohra, R., 1995. Nash implementation through elementary mechanisms in economic environments. Review of Economic Design 1, 173-203] that Nash implements the constrained Walrasian correspondence. We extend it to incomplete and non-exclusive information economies by enlarging the message space of agents. In addition, measurability restrictions on allocations with respect to prices proper to constrained rational expectations equilibria are imposed in the outcome function. We show that by imposing such restrictions, the mechanism Bayesian implements the constrained rational expectations equilibrium correspondence. This result shows game-theoretic connections between these two market equilibrium concepts. However, these connections are obtained at the price of strong restrictions on the behavior of agents.

Original languageEnglish (US)
Pages (from-to)735-748
Number of pages14
JournalJournal of Mathematical Economics
Volume43
Issue number6
DOIs
StatePublished - Aug 2007

Keywords

  • Elementary mechanism
  • Implementation
  • Rational expectations equilibrium
  • Walrasian equilibrium

ASJC Scopus subject areas

  • Economics and Econometrics
  • Applied Mathematics

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