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

Correlated information, mechanism design and informational rents

The optimal mechanism literature shows that the principal can extract all the equilibrium payoffs at a given Bayesian Game when the players’ information is correlated. For this result to hold, the principal needs to know how informative are the agents’ signals. If the principal does not know how noisy the signal of a player is, or equivalently, when the signals available to a player can be rank...

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...