Overcoming Participation Constraints

Cowles Foundation Discussion Paper No. 1511

Microeconomic Theory in Canada Paper No. 05-04-22-05-35-30

27 Pages Posted: 4 May 2005

See all articles by Hanming Fang

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Peter Norman

University of British Columbia - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2005

Abstract

In incomplete information environments with transferable utility, efficient outcomes are generally implementable unless interim or ex post participation constraints are imposed on the problem. In this paper we show that linking a sufficiently large number of independent but possibly unrelated social decisions, a slightly perturbed Groves mechanism can implement an efficient outcome with probability arbitrarily close to one, while respecting all participation, incentive and balanced budget constraints.

Note: An updated version of this abstract can be found at: http://ssrn.com/abstract=900425

Keywords: Participation constraints, efficiency, Groves mechanism, linking

JEL Classification: D61, D82, H41

Suggested Citation

Fang, Hanming and Norman, Peter, Overcoming Participation Constraints (May 2005). Cowles Foundation Discussion Paper No. 1511, Microeconomic Theory in Canada Paper No. 05-04-22-05-35-30, Available at SSRN: https://ssrn.com/abstract=713023

Hanming Fang

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Peter Norman (Contact Author)

University of British Columbia - Department of Economics ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z2
Canada
(604) 822-2839 (Phone)

HOME PAGE: http://faculty.arts.ubc.ca/pnorman/

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