Correlated information, mechanism design and informational rents

Corrigendum to “ Correlated information , mechanism design and informational rents ”

We amend an error in [S. Parreiras, Correlated information, mechanism design and informational rents, J. of Econ. Theory 123 (2005) 210–217]. Consequently, it is in general not possible to reinterpret a mechanism design model that violates the spanning condition of Crémer and McLean [Econometrica 56 (1988) 1247–1258] as one in which agents hold private information about the informativeness of t...

The relevance of private information in mechanism design

Recent results in mechanism design show that as long as agents have correlated private information and are sufficiently risk neutral, it is possible to design mechanisms that leave agents with arbitrarily small information rents. We show that these full-rent-extraction results hinge on the implicit assumption that the agents’ beliefs uniquely determine their preferences. We present an example o...

Informational Rents in Bargaining with Serially Correlated Valuations

Information Sharing in Banking: A Collusive Device?

We show that information sharing among banks may serve as a collusive device. An informational sharing agreement is an a-priori commitment to reduce informational asymmetry between banks in future lending. Hence, information sharing agreements tend to increase the intensity of competition in future periods and, thus, reduce the value of informational rents in current competition. We contribute ...

Transaction Costs and Incentive Theory ∗

This paper tries to reconcile incentive theory with transaction costs theory. We first discuss the fundamental assumptions underlying the use of the Revelation Principle in the standard mechanism design literature and show how various contractual incompletenesses and externalities induced by transaction costs affect the basic trade-off between allocative efficiency and informational rents highl...