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Informational Smallness and Incentive Compatibility (1999)
by
Richard McLean
,
Andrew Postlewaite
BibTeX
@MISC{McLean99informationalsmallness,
author = {Richard McLean and Andrew Postlewaite},
title = {Informational Smallness and Incentive Compatibility},
year = {1999}
}
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Abstract
We examine a general equilibrium model with asymetrically informed agents. The presence of asymmetric information generally presents a conflict between incentive compatibility and Pareto efficiency. We present a notion of informational size and show that the conflict between incentive compatibility and e±ciency can be made arbitrarily small if agents are sufficiently small informationally.
