A Unique Informationally Efficient and Decentralized Mechanism with Fair Outcomes

Abstract

As from January 1990 the EUI Working Paper Series is divided into six sub-series, each sub-series will be numbered individually (e.g. EUI Working Paper LAW No 90/1).

Mechanisms that efficiently verify the optimality of a proposed action

“…Calsamiglia (1977) studies message-space requirements when there are increasing returns. Calsamiglia and Kirman (1993) study the requirements when fairness is achieved as well as Pareto optimality; Reichelstein and Reiter (1988) study them when the mechanism is constrained to have certain incentive properties; and Jordan (1987) studies them when a convergence property is imposed on the mechanism. Hurwicz and Weinberger (1990) study message-space size when intertemporal efficiency is required in infinite-period economies.…”

A Unique Informationally Efficient Allocation Mechanism In Economies With Consumption Externalities*

“…The realization theory studies the question of how much communication must be provided to realize a given performance, or more precisely, studies the minimal informational cost of operating a given performance in terms of the size of the message space and determines which economic system or social choice rule is informationally the most efficient in the sense that the minimal informational cost is used to operate the system. Since the pioneering work of Hurwicz (1960), there has been a lot of work on studying the informational requirements of decentralized resource allocation mechanisms over various classes of economies such as those in Calsamiglia (1977), Calsamiglia and Kirman (1993), Hurwicz (1972, 1977, 1999), Hurwicz, Reiter, and Saari (1985), Mount and Reiter (1974), Sato (1981), Tian (1990, 1994, 2000a, 2000b) among others.…”

Competitive Market Mechanisms as Social Choice Procedures

“…The discussion has since been advanced by Florig (2001b) and by McKenzie (2002) himself. 19 Rather than pursue this further, the discussion 18 This follows an earlier idea due to Gale (1957) -see also Gale (1976), Eaves (1976) and Hammond (1993). 19 Translated to the present context, McKenzie (2002, p. 172) defines an economy as irreducible when, for any proper subset K ⊂ N and any feasible allocation (x N ,ŷ N ), there exist (x i , y i ) ∈ X i × Y i for all i ∈ K and a scalar λ > 0 such that…”

“…He defined an economy as irreducible provided that, for any proper subset K ⊂ N and any feasible allocation ( 18 This condition can be interpreted as requiring the existence of appropriate consumption and production vectors (x i , y i ) ∈ X i × Y i for all i ∈ N \ K such that, if the feasible aggregate net supply vector − i∈N \K (x i − y i ) became available from outside the economy, these additional exogenous resources could be distributed as incremental net trade vectors (x i − y i ) − (x i −ŷ i ) to the agents i ∈ K in a way which benefits them all simultaneously, without affecting the other agents i ∈ N \ K at all. It is easy to check that an economy satisfying the ArrowDebreu condition described above must be irreducible.…”