Pub Date : 2025-10-01Epub Date: 2025-08-29DOI: 10.1016/j.jet.2025.106076
Arno Apffelstaedt
I introduce endogenous information disclosure into a model of “spontaneous discrimination” à la Peski and Szentes (2013). Individuals in a finite population repeatedly decide whether to engage in profitable interactions with a randomly assigned or chosen partner. Each individual has a fixed physical and a dynamic social color. Social color conveys information about the colors of past partners—but only if that information is disclosed by the decision maker or a random observer. I characterize conditions under which endogenous disclosure supports inefficient equilibria where individuals discriminate by conditioning interactions on the (payoff-irrelevant) colors of potential partners. The analysis shows how competition for being selected as partner interacts with discriminatory norms to create strict incentives for information disclosure, thereby sustaining discrimination that would otherwise break down.
我将内生信息披露引入“自发歧视”模型（la Peski and Szentes, 2013）。有限种群中的个体反复决定是否与随机分配或选择的伙伴进行有益的互动。每个人都有固定的身体和动态的社会色彩。社会色彩传达了过去伴侣的颜色信息——但只有当这些信息是由决策者或随机观察者披露的时候。我描述了内源性披露支持低效均衡的条件，在这种条件下，个体通过对潜在伴侣的（与回报无关的）颜色进行条件作用来进行歧视。分析表明，被选为合作伙伴的竞争是如何与歧视性规范相互作用的，从而为信息披露创造了严格的激励机制，从而维持了本来会消失的歧视。
{"title":"Spontaneous discrimination with endogenous information disclosure","authors":"Arno Apffelstaedt","doi":"10.1016/j.jet.2025.106076","DOIUrl":"10.1016/j.jet.2025.106076","url":null,"abstract":"<div><div>I introduce endogenous information disclosure into a model of “spontaneous discrimination” à la <span><span>Peski and Szentes (2013)</span></span>. Individuals in a finite population repeatedly decide whether to engage in profitable interactions with a randomly assigned or chosen partner. Each individual has a fixed physical and a dynamic social color. Social color conveys information about the colors of past partners—but only if that information is disclosed by the decision maker or a random observer. I characterize conditions under which endogenous disclosure supports inefficient equilibria where individuals discriminate by conditioning interactions on the (payoff-irrelevant) colors of potential partners. The analysis shows how competition for being selected as partner interacts with discriminatory norms to create strict incentives for information disclosure, thereby sustaining discrimination that would otherwise break down.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"229 ","pages":"Article 106076"},"PeriodicalIF":1.2,"publicationDate":"2025-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144922530","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-10-01Epub Date: 2025-08-18DOI: 10.1016/j.jet.2025.106066
Wenji Xu
This paper studies a sequential social learning model in which agents learn about an underlying state from others' actions. Unlike classic models, we consider a setting where agents may observe coarse signals of past actions. We identify a simple, necessary, and sufficient condition for asymptotic learning, called separability, which depends on both the information environment and the payoff structure. A necessary condition for separability is “unbounded beliefs” which requires agents' private information to generate strong evidence of the true state, even if only with small probabilities. We also identify conditions on the information environment alone that guarantee separability for all payoff structures. These conditions include unbounded beliefs and a new condition on agents' signals of others' actions, termed double thresholds. Without double thresholds, learning can be confounded so that agents always choose different actions with positive probabilities and never reach a consensus.
{"title":"Social learning through coarse signals of others' actions","authors":"Wenji Xu","doi":"10.1016/j.jet.2025.106066","DOIUrl":"10.1016/j.jet.2025.106066","url":null,"abstract":"<div><div>This paper studies a sequential social learning model in which agents learn about an underlying state from others' actions. Unlike classic models, we consider a setting where agents may observe coarse signals of past actions. We identify a simple, necessary, and sufficient condition for asymptotic learning, called <em>separability</em>, which depends on both the information environment and the payoff structure. A necessary condition for separability is “unbounded beliefs” which requires agents' private information to generate strong evidence of the true state, even if only with small probabilities. We also identify conditions on the information environment alone that guarantee separability for all payoff structures. These conditions include unbounded beliefs and a new condition on agents' signals of others' actions, termed <em>double thresholds</em>. Without double thresholds, learning can be confounded so that agents always choose different actions with positive probabilities and never reach a consensus.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"229 ","pages":"Article 106066"},"PeriodicalIF":1.2,"publicationDate":"2025-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145019733","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-10-01Epub Date: 2025-08-25DOI: 10.1016/j.jet.2025.106069
Jin Yeub Kim , Jong Jae Lee
This paper presents a theory of mediator selection in conflicts that compares biased and unbiased mediation. We characterize optimal mechanisms used by biased mediators when they are selected into mediation, and determine when and how parties in dispute accept a biased mediator in equilibrium. We find that when asymmetric information is significant, parties accept biased mediation as long as the degree of mediator bias is not too strong. Biased mediators care more about the payoffs of their favored party. Nevertheless, we find that biased mediators can be equally effective in promoting peace as the unbiased mediator. This is because biased mediators use recommendation strategies that allocate more shares of resource to their favored party while providing a higher chance of peaceful settlement to a weaker type of their disfavored party.
{"title":"Biased mediation: Selection and effectiveness","authors":"Jin Yeub Kim , Jong Jae Lee","doi":"10.1016/j.jet.2025.106069","DOIUrl":"10.1016/j.jet.2025.106069","url":null,"abstract":"<div><div>This paper presents a theory of mediator selection in conflicts that compares biased and unbiased mediation. We characterize optimal mechanisms used by biased mediators when they are selected into mediation, and determine when and how parties in dispute accept a biased mediator in equilibrium. We find that when asymmetric information is significant, parties accept biased mediation as long as the degree of mediator bias is not too strong. Biased mediators care more about the payoffs of their favored party. Nevertheless, we find that biased mediators can be equally effective in promoting peace as the unbiased mediator. This is because biased mediators use recommendation strategies that allocate more shares of resource to their favored party while providing a higher chance of peaceful settlement to a weaker type of their disfavored party.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"229 ","pages":"Article 106069"},"PeriodicalIF":1.2,"publicationDate":"2025-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144902660","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-07-05DOI: 10.1016/j.jet.2025.106052
Guilherme Carmona, Krittanai Laohakunakorn
We analyze a monopoly pricing model where information about the buyer's valuation is endogenous. Before the seller sets a price, both the buyer and the seller receive private signals that may be informative about the buyer's valuation. The joint distribution of these signals, as a function of the valuation, is optimally chosen by the players. In general, players have conflicting incentives over the provision of information. As a modelling device, we assume that an aggregation function determines the information structure from the choices of the players, and we characterize the pure strategy equilibrium payoffs for a natural class of aggregation functions. Every equilibrium payoff can be achieved by an information structure that is the result of the seller trying to make both players uninformed while the buyer tries to learn about his valuation. Price discrimination is limited to the seller setting different prices for informed vs uninformed buyers.
{"title":"Monopoly pricing with optimal information","authors":"Guilherme Carmona, Krittanai Laohakunakorn","doi":"10.1016/j.jet.2025.106052","DOIUrl":"10.1016/j.jet.2025.106052","url":null,"abstract":"<div><div>We analyze a monopoly pricing model where information about the buyer's valuation is endogenous. Before the seller sets a price, both the buyer and the seller receive private signals that may be informative about the buyer's valuation. The joint distribution of these signals, as a function of the valuation, is optimally chosen by the players. In general, players have conflicting incentives over the provision of information. As a modelling device, we assume that an aggregation function determines the information structure from the choices of the players, and we characterize the pure strategy equilibrium payoffs for a natural class of aggregation functions. Every equilibrium payoff can be achieved by an information structure that is the result of the seller trying to make both players uninformed while the buyer tries to learn about his valuation. Price discrimination is limited to the seller setting different prices for informed vs uninformed buyers.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106052"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144572434","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-06-25DOI: 10.1016/j.jet.2025.106049
Debasis Mishra , Sanket Patil
We study undominated mechanisms with transfers for regulating a monopolist who privately observes the marginal cost of production. A mechanism is undominated if no other mechanism gives the regulator a strictly higher payoff at some marginal cost of the monopolist without lowering the regulator's payoff at other costs. We show that an undominated mechanism has a quantity floor: whenever the monopolist is allowed to operate, it produces above a threshold quantity. Moreover, the regulator's operation decision is stochastic only if the monopolist produces at the quantity floor. We provide a near-complete characterization of the set of undominated mechanisms and use it to (a) derive a max-min optimal regulatory mechanism, (b) provide a foundation for deterministic mechanisms, and (c) show that the efficient mechanism is dominated.
{"title":"Undominated monopoly regulation","authors":"Debasis Mishra , Sanket Patil","doi":"10.1016/j.jet.2025.106049","DOIUrl":"10.1016/j.jet.2025.106049","url":null,"abstract":"<div><div>We study undominated mechanisms with transfers for regulating a monopolist who privately observes the marginal cost of production. A mechanism is undominated if no other mechanism gives the regulator a strictly higher payoff at some marginal cost of the monopolist without lowering the regulator's payoff at other costs. We show that an undominated mechanism has a quantity floor: whenever the monopolist is allowed to operate, it produces above a threshold quantity. Moreover, the regulator's operation decision is stochastic only if the monopolist produces at the quantity floor. We provide a near-complete characterization of the set of undominated mechanisms and use it to (a) derive a max-min optimal regulatory mechanism, (b) provide a foundation for deterministic mechanisms, and (c) show that the efficient mechanism is dominated.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106049"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144491489","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-06-04DOI: 10.1016/j.jet.2025.106038
Antoine Billot , Xiangyu Qu
We study social intertemporal preferences constructed through the aggregation of individual preferences that differ in both time discounting and instantaneous utility. We introduce weakened forms of the Pareto condition under which the social discount and instantaneous utility functions are weighted averages of their individual counterparts. We show that if individuals are time-consistent, then society can only preserve this property without falling into dictatorship by applying the condition to comparisons involving only two periods. In such cases, the social discount factor is a weighted average of individual discount factors. When the condition is applied to longer consumption horizons, the resulting social preferences display decreasing impatience. Moreover, the longer the comparison horizon, the stronger the society's preference for patience over time becomes, under mild conditions.
{"title":"Stationary altruism and time consistency","authors":"Antoine Billot , Xiangyu Qu","doi":"10.1016/j.jet.2025.106038","DOIUrl":"10.1016/j.jet.2025.106038","url":null,"abstract":"<div><div>We study social intertemporal preferences constructed through the aggregation of individual preferences that differ in both time discounting and instantaneous utility. We introduce weakened forms of the Pareto condition under which the social discount and instantaneous utility functions are weighted averages of their individual counterparts. We show that if individuals are time-consistent, then society can only preserve this property without falling into dictatorship by applying the condition to comparisons involving only two periods. In such cases, the social discount factor is a weighted average of individual discount factors. When the condition is applied to longer consumption horizons, the resulting social preferences display decreasing impatience. Moreover, the longer the comparison horizon, the stronger the society's preference for patience over time becomes, under mild conditions.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106038"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144221901","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-07-31DOI: 10.1016/j.jet.2025.106061
Umut Çetin
This paper addresses the question of how insiders internalize the additional penalties to trade in a continuous time Kyle model. The penalties can be interpreted as non-adverse selection transaction costs or legal penalties due to illegal insider trading. The equilibrium is established for general asset distribution. In equilibrium, the insider does not disseminate her private information fully into the market prices. Moreover, she always trades a constant multiple of the discrepancy between her own valuation and her forecast of market price right before her private information becomes public. In the particular case of normally distributed asset value, the trades are split evenly over time for sufficiently large penalties, with trade size proportional to the return on the private signal. Although the noise traders lose less when penalties increase, the insider's total penalty in equilibrium is non-monotone since the insider trades little when the penalties surpasses the value of the private signal. As a result, a budget-constrained regulator runs an investigation only if the benefits of the investigation are sufficiently high. Moreover, the optimal penalty policy is reduced to choosing from one of two extremal penalty levels that correspond to high and low liquidity regimes. The optimal choice is determined by the amount of noise trading and the relative importance of price informativeness.
{"title":"Insider trading with penalties in continuous time","authors":"Umut Çetin","doi":"10.1016/j.jet.2025.106061","DOIUrl":"10.1016/j.jet.2025.106061","url":null,"abstract":"<div><div>This paper addresses the question of how insiders internalize the additional penalties to trade in a continuous time Kyle model. The penalties can be interpreted as non-adverse selection transaction costs or legal penalties due to illegal insider trading. The equilibrium is established for general asset distribution. In equilibrium, the insider does not disseminate her private information fully into the market prices. Moreover, she always trades a constant multiple of the discrepancy between her own valuation and her forecast of market price right before her private information becomes public. In the particular case of normally distributed asset value, the trades are split evenly over time for sufficiently large penalties, with trade size proportional to the return on the private signal. Although the noise traders lose less when penalties increase, the insider's total penalty in equilibrium is non-monotone since the insider trades little when the penalties surpasses the value of the private signal. As a result, a budget-constrained regulator runs an investigation only if the benefits of the investigation are sufficiently high. Moreover, the optimal penalty policy is reduced to choosing from one of two extremal penalty levels that correspond to high and low liquidity regimes. The optimal choice is determined by the amount of noise trading and the relative importance of price informativeness.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106061"},"PeriodicalIF":1.2,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144748958","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-07-15DOI: 10.1016/j.jet.2025.106053
Peter H. Egger , Ruobing Huang
A large body of theoretical and quantitative work concerns models of heterogeneous firms and monopolistic competition. But most of it relies on strong assumptions regarding demand structure, firm-productivity distribution, and country heterogeneity. This paper studies a general-equilibrium model with directly explicitly additive preferences, non-specified productivity distributions, and asymmetric countries, for which much less is known. We first prove the existence and uniqueness of the market equilibrium with a three-stage approach of analyzing competition intensities and wages. We then explore the market-allocation mechanism and provide a baseline comparison between the market and a utilitarian optimum from a global planner's perspective. We show that misallocation in open economies can be decomposed into two effects, driven by country asymmetry and the variable elasticity of substitution. We present two examples exhibiting constant and variable markups, respectively, to illustrate how to apply our general theorem.
{"title":"Market versus optimum allocation in open economies","authors":"Peter H. Egger , Ruobing Huang","doi":"10.1016/j.jet.2025.106053","DOIUrl":"10.1016/j.jet.2025.106053","url":null,"abstract":"<div><div>A large body of theoretical and quantitative work concerns models of heterogeneous firms and monopolistic competition. But most of it relies on strong assumptions regarding demand structure, firm-productivity distribution, and country heterogeneity. This paper studies a general-equilibrium model with directly explicitly additive preferences, non-specified productivity distributions, and asymmetric countries, for which much less is known. We first prove the existence and uniqueness of the market equilibrium with a three-stage approach of analyzing competition intensities and wages. We then explore the market-allocation mechanism and provide a baseline comparison between the market and a utilitarian optimum from a global planner's perspective. We show that misallocation in open economies can be decomposed into two effects, driven by country asymmetry and the variable elasticity of substitution. We present two examples exhibiting constant and variable markups, respectively, to illustrate how to apply our general theorem.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106053"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144655972","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-08-04DOI: 10.1016/j.jet.2025.106060
Bhavook Bhardwaj , Kriti Manocha
This paper introduces a model of decision making based on a procedure of rejection. Departing from the standard model of choice via preference maximization, the decision maker (DM) in our model rejects minimal alternatives from a menu according to a binary relation. We axiomatically study the correspondence of non-rejected alternatives with different rationality conditions on the underlying binary relation. We then generalize our model to study correspondences generated by an iterative procedure of rejection. It is observed that the classical rational choice model is a special case of this model, thus providing a procedural description of selecting the maximal set. We find that the rejection approach developed in this paper can also explain anomalies observed in decision theory, such as the two-decoy effect or the two-compromise effect.
{"title":"A model of rejection-based decision making","authors":"Bhavook Bhardwaj , Kriti Manocha","doi":"10.1016/j.jet.2025.106060","DOIUrl":"10.1016/j.jet.2025.106060","url":null,"abstract":"<div><div>This paper introduces a model of decision making based on a procedure of <em>rejection</em>. Departing from the standard model of choice via preference maximization, the decision maker (DM) in our model rejects <em>minimal</em> alternatives from a menu according to a binary relation. We axiomatically study the correspondence of non-rejected alternatives with different rationality conditions on the underlying binary relation. We then generalize our model to study correspondences generated by an iterative procedure of rejection. It is observed that the classical rational choice model is a special case of this model, thus providing a procedural description of selecting the maximal set. We find that the rejection approach developed in this paper can also explain anomalies observed in decision theory, such as the <em>two-decoy effect</em> or the <em>two-compromise effect</em>.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106060"},"PeriodicalIF":1.2,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144770951","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01Epub Date: 2025-07-24DOI: 10.1016/j.jet.2025.106055
David Delacrétaz , Simon Loertscher , Claudio Mezzetti
Lindahl prices, set by a fictitious auctioneer with full knowledge of values and costs, are a generalization of Walrasian prices. By making the efficient allocation utility- and profit-maximizing for all players, they induce an efficient outcome in a decentralized way even in the presence of public goods. We study a collective choice model with quasilinear utility, which encompasses the allocation of public and private goods as special cases. We show that each agent's most favorable Lindahl payment (the smallest Lindahl price for the efficient alternative) is equal to his VCG transfer while the firm's VCG transfer is equal to its most favorable Lindahl payment (the largest sum of Lindahl prices for the efficient alternative). Thus, the VCG mechanism incurs a deficit if and only if the set of vectors of the agents' Lindahl payments is multi-valued. Unlike Walrasian prices, Lindahl prices are not restricted to be anonymous or additive. This is the reason why, when considering the allocation of private goods, the agents' smallest Walrasian payments are at least as large as their most favorable Lindahl payments, and thus their VCG transfers. It is also why Lindahl prices always exist while Walrasian prices may not.
{"title":"Public goods, social alternatives, and the Lindahl-VCG relationship","authors":"David Delacrétaz , Simon Loertscher , Claudio Mezzetti","doi":"10.1016/j.jet.2025.106055","DOIUrl":"10.1016/j.jet.2025.106055","url":null,"abstract":"<div><div>Lindahl prices, set by a fictitious auctioneer with full knowledge of values and costs, are a generalization of Walrasian prices. By making the efficient allocation utility- and profit-maximizing for all players, they induce an efficient outcome in a decentralized way even in the presence of public goods. We study a collective choice model with quasilinear utility, which encompasses the allocation of public and private goods as special cases. We show that each agent's most favorable Lindahl payment (the smallest Lindahl price for the efficient alternative) is equal to his VCG transfer while the firm's VCG transfer is equal to its most favorable Lindahl payment (the largest sum of Lindahl prices for the efficient alternative). Thus, the VCG mechanism incurs a deficit if and only if the set of vectors of the agents' Lindahl payments is multi-valued. Unlike Walrasian prices, Lindahl prices are not restricted to be anonymous or additive. This is the reason why, when considering the allocation of private goods, the agents' smallest Walrasian payments are at least as large as their most favorable Lindahl payments, and thus their VCG transfers. It is also why Lindahl prices always exist while Walrasian prices may not.</div></div>","PeriodicalId":48393,"journal":{"name":"Journal of Economic Theory","volume":"228 ","pages":"Article 106055"},"PeriodicalIF":1.2,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144721790","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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