Uncertainty and robustness of surplus extraction

A-Tier
Journal: Journal of Economic Theory
Year: 2022
Volume: 199
Issue: C

Authors (3)

Lopomo, Giuseppe (not in RePEc) Rigotti, Luca (University of Pittsburgh) Shannon, Chris (not in RePEc)

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper studies a robust version of the classic surplus extraction problem, in which the designer knows only that the beliefs of each type belong to some set, and designs mechanisms that are suitable for all possible beliefs in that set. We derive necessary and sufficient conditions for full extraction in this setting, and show that these are natural set-valued analogues of the classic convex independence condition identified by Crémer and McLean (1985, 1988). We show that full extraction is neither generically possible nor generically impossible, in contrast to the standard setting in which full extraction is generic. When full extraction fails, we show that natural additional conditions can restrict both the nature of the contracts a designer can offer and the surplus the designer can obtain.

Technical Details

RePEc Handle
repec:eee:jetheo:v:199:y:2022:i:c:s0022053120300831
Journal Field
Theory
Author Count
3
Added to Database
2026-01-29