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The Ex Ante Incentive Compatible Core in the Absence of Wealth Effects
Françoise Forges
Jean–François Mertens
Rajiv Vohra
Abstract
In a differential information economy with quasi–linear utilities, monetary transfers facilitate the fulfillment of incentive compatibility constraints: the associated ex ante core is generically nonempty. However, we exhibit a well–behaved exchange economy in which this core is empty, even if goods are allocated through random mechanisms.
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