CFDP 1511

Overcoming Participation Constraints

Author(s): 

Publication Date: May 2005

Pages: 26

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.

Keywords: 

Linking, Participation constraints, Perturbed groves mechanism

JEL Classification Codes: D61, D82, H41