The Genericity of the McAfee-Reny Condition for Full Surplus Extraction in Models with a Continuum of Types

44 Pages Posted: 31 Jul 2015

See all articles by Alia Gizatulina

Alia Gizatulina

Max Planck Institute for Research on Collective Goods

Martin F. Hellwig

Max Planck Institute for Research on Collective Goods; University of Bonn - Department of Economics; European Corporate Governance Institute (ECGI)

Date Written: July 1, 2015

Abstract

McAfee and Reny (1992) have given a necessary and sufficient condition for full surplus extraction in models with a continuum of types. We interpret their condition as significantly stronger version of the requirement of injectiveness of the function mapping abstract types into beliefs and prove that their condition is satisfied by a generic set of model specifications. Our analysis involves an extension of the classical embedding theorem for continuous functions. Our proof does not rely on finite approximations and the topology on beliefs that we use is compatible with strategic continuity.

Keywords: Mechanism Design, surplus extraction, BDP, correlated information, strategic continuity

JEL Classification: D82, D44, D40, D80

Suggested Citation

Gizatulina, Alia and Hellwig, Martin F., The Genericity of the McAfee-Reny Condition for Full Surplus Extraction in Models with a Continuum of Types (July 1, 2015). MPI Collective Goods Preprint, No. 2015/08, Available at SSRN: https://ssrn.com/abstract=2637292 or http://dx.doi.org/10.2139/ssrn.2637292

Alia Gizatulina (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Martin F. Hellwig

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Bonn - Department of Economics

Adenauerallee 24-42
D-53113 Bonn
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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