TY - JOUR
T1 - Egalitarian equivalence under asymmetric information
AU - de Clippel, Geoffroy
AU - Pérez-Castrillo, David
AU - Wettstein, David
N1 - Funding Information:
✩ We thank two referees for their comments and suggestions. Geoffroy de Clippel gratefully acknowledges the financial support from the National Science Foundation (grant SES-0851210). David Wettstein gratefully acknowledges the financial support from the Israeli Science Foundation (grant No. 776/08) and the Pinchas Sapir Center for Development in Tel Aviv University. David Pérez-Castrillo gratefully acknowledges the financial support from projects 2009-0761ECON, 2009SGR-169, Barcelona GSE and ICREA Academia. He is a research fellow of MOVE. * Corresponding author. E-mail addresses: [email protected] (G. de Clippel), [email protected] (D. Pérez-Castrillo), [email protected] (D. Wettstein). 1 Other attempts to capture fairness and efficiency in the theory of social choice include the maximization of social welfare orderings, such as the egalitarian minimum, the utilitarian sum, or the Nash product. A major difference compared to the notions of envy-freeness and egalitarian equivalence, is that utilities must have some cardinal content in order to escape impossibility results of the kind first proved by Arrow. Efficiency and fairness are also of great concern in the theory of cooperative games. A prominent example of such concern is given by the Shapley value for characteristic functions with transferable utilities and its various extensions to more general environments (see McLean, 2002, for a survey). 2 The revelation principles (Gibbard, 1973; Green and Laffont, 1977, and Myerson, 1979) have been a powerful tool in this task. 3 See, for instance, the development of auctions, contract theory, or the principal–agent literature.
PY - 2012/5/1
Y1 - 2012/5/1
N2 - We propose a definition of egalitarian equivalence that extends Pazner and Schmeidler's (1978) concept to environments with incomplete information. If every feasible allocation rule can be implemented by an incentive compatible mechanism (as, for instance, in the case of non-exclusive information), then interim egalitarian equivalence and interim incentive efficiency remain compatible, as they were under complete information. When incentive constraints are more restrictive, on the other hand, the two criteria may become incompatible.
AB - We propose a definition of egalitarian equivalence that extends Pazner and Schmeidler's (1978) concept to environments with incomplete information. If every feasible allocation rule can be implemented by an incentive compatible mechanism (as, for instance, in the case of non-exclusive information), then interim egalitarian equivalence and interim incentive efficiency remain compatible, as they were under complete information. When incentive constraints are more restrictive, on the other hand, the two criteria may become incompatible.
KW - Asymmetric information
KW - Egalitarian equivalence
KW - Pareto efficiency
UR - http://www.scopus.com/inward/record.url?scp=84859893293&partnerID=8YFLogxK
U2 - 10.1016/j.geb.2011.10.005
DO - 10.1016/j.geb.2011.10.005
M3 - Article
AN - SCOPUS:84859893293
SN - 0899-8256
VL - 75
SP - 413
EP - 423
JO - Games and Economic Behavior
JF - Games and Economic Behavior
IS - 1
ER -