Now showing 1 - 6 of 6
  • Publication
    The generic possibility of full surplus extraction in models with large type spaces
    (Elsevier, 2017-07) ;
    Hellwig, Martin
    McAfee and Reny(1992)have given a necessary and sufficient condition for full surplus extraction in naive type spaces with a continuum of payoff types. We generalize their characterization to arbitrary abstract type spaces and to the universal type space and show that in each setting, full surplus extraction is generically possible. We interpret the McAfee–Reny condition as a much stronger version of injectiveness of belief functions and prove genericity by arguments similar to those used to prove the classical embedding theorem for continuous functions. Our results can be used to also establish the genericity of common priors that admit full surplus extraction.
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    Scopus© Citations 1
  • Publication
    Beliefs, payoffs, information: On the robustness of the BDP property in models with endogenous beliefs
    (Elsevier, 2014-03-01) ;
    Hellwig, Martin
    Neeman (2004) and Heifetz and Neeman (2006) have shown that, in auctions with incomplete information about payoffs, full surplus extraction is only possible if agents' beliefs about other agents are fully informative about their own payoff parameters. They argue that the set of incomplete-information models with common priors that satisfy this so-called BDP property ("beliefs determine preferences") is negligible. In contrast, we show that, in models with finite-dimensional abstract type spaces, the set of belief functions with this property is topologically generic in the set of all belief functions. Our result implies genericity of (non-common or common) priors with the BDP property.
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    Scopus© Citations 3
  • Publication
    Informational smallness and the scope for limiting information rents
    (Elsevier, 2010-07-15) ;
    Hellwig, Martin
    For an incomplete-information model of public-good provision with interim participation constraints, we show that efficient outcomes can be approximated, with approximately full surplus extraction, when there are many agents and each agent is informationally small. The result holds even if agents' payoffs cannot be unambiguously inferred from their beliefs. The contrary result of Neeman [Z. Neeman, The relevance of private information in mechanism design, J. Econ. Theory 117 (2004) 55-77] rests on an implicit uniformity requirement that is incompatible with the notion that agents are informationally small because there are many other agents who have information about them.
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    Scopus© Citations 3
  • Publication
    NO TRADE AND YES TRADE THEOREMS FOR HETEROGENEOUS PRIORS
    ( 2018-06-01) ;
    Hellman, Ziv
    We show that even under heterogeneous priors the classical no trade theorem obtains. However, speculative trade becomes mutually acceptable if at least one party to the trade puts at least some slight probability on the other party being irrational. We also derive bounds on disagreements in the case of heterogeneous priors and p-common beliefs.
  • Publication
    SELLING "MONEY" ON EBAY: A FIELD STUDY OF SURPLUS DIVISION
    (NA, 2017-08-08) ;
    Gorelkina, Olga
    We study the division of trade surplus in a natural field experiment conducted on German eBay. Acting as a seller, we offer Amazon gift cards with face values of up to 500 Euro. A random selection of buyers, the subjects of our experiment, make price offers according to the rules of eBay. Using a novel decomposition method, we infer the offered shares of trade surplus from the data and find that the average share proposed to the seller amounts to about 30%. Additionally, we document: (i) insignificant effects of the stake size; (ii) poor use of strategically relevant public information; and (iii) differences in behaviour between East and West German subjects.
  • Publication
    Betting on Others' Bets: Unions of Surplus Extraction Mechanisms
    We construct the generalized Crémer-McLean mechanism where agent i's participation fee depends not only on the valuations reported by -i agents at the second stage, but also on the choice of the participation fee by -i at the first stage. Such construction allows to exploit the convex hull property of beliefs whenever it appears in beliefs about beliefs rather than in beliefs about preferences. As such betting retrieves agents' entire hierarchies of beliefs, it reveals what is common knowledge among them. Hence for any given finite or countable collection of type spaces where each type spaces verifies the convex hull property within itself, the designer can propose a union of GCM mechanisms and extract the surplus across type spaces, i.e., regardless of absence of knowledge by the designer which type space agents share (and without relying on the shoot-the-liar mechanism). We discuss when the technique of using a union of individual mechanisms is extendable to more general cases.