In a nite-trader version of the Diamond-Dybvig (1983) model, the symmetric, ex-ante e cient allocation is implementable by a direct mechanism (i.e., each trader announces the type of his own ex-post preference) in which truthful revelation is the strictly dominant strategy for each trader. When the model is modi ed by formalizing the sequential-service constraint (cf. Wallace, 1988), the truth-...

We consider a perfectly competitive ex ante economy with a continuum of agents and negligible asymmetric information. For such an economy we recast the basic classical results on the existence of Walrasian equilibrium, core equivalence, and the blocking size of coalitions. Moreover, we examine the incentive compatibility of the ex ante Pareto, core and Walrasian allocations. © 2007 Elsevier Inc...

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We study a definition of subjective beliefs applicable to preferences that allow for the perception of ambiguity, and provide a characterization of such beliefs in terms of market behavior. Using this definition, we derive necessary and sufficient conditions for the efficiency of ex ante trade and show that these conditions follow from the fundamental welfare theorems. When aggregate uncertaint...

We analyze a model of competition in Bayesian persuasion in which two or more senders vie for the patronage of a receiver by disclosing information about their respective proposal qualities. The model’s primitives that define the competitive environment are: the ex-ante correlation of senders’ proposal qualities; the respective ex-ante expected proposal qualities; and the number of competing se...

We find a necessary and sufficient condition for ex-ante trade when agents are non-expected utility maximizers. The condition is that they share subjective beliefs. Our result holds for a class of convex preferences that contains many functional forms used in applications. In a special case of expected utility, the condition becomes exactly the common prior assumption. It can also be articulate...

Distressed firms are vulnerable to ineffi cient panic-based runs of their workers, suppliers, and customers. A policymaker may try to prevent such a run by pledging to protect the interests of these stakeholders should a firm cease to do business. However, this promise also enables the firm to demand better terms of trade from its stakeholders, which blunts the policy’s effectiveness. We show h...

In this paper, we experimentally investigate in a large game four matching mechanisms related to China’s college admission system: Boston or serial dictatorship with students submitting their preferences either before (incomplete information) or after (complete information) the score realization. We find significant differences in the proportion of truth-telling across the mechanisms, but there...

The paper tests the unbiasedness of interest differentials and term structure as predictors of inflation differentials and inflation changes, respectively, using three-, sixand twelve-month maturities in eight major industrial countries over the period 1981—1992. The first hypothesis requires rational expectations (RE) and equality of ex-ante real interest rates, which in turn holds only in the...

Most studies of legislative control of agencies have focused on national level institutions. In this paper we undertake a comparative study of political control by looking at state legislatures and the control of Medicaid policy. We develop and test a theory about the conditions under which state legislatures should opt to rely on detailed legislation (ex ante control) in order to limit the dis...