Econometrica: Jan 1981, Volume 49, Issue 1
Resource Allocation Under Asymmetric Information
Milton Harris, Robert M. TownsendThe purpose of this paper is to provide a method for characterizing efficient allocation processes and efficient allocations for a large class of environments in which asymmetric information is an important factor. This method is based on a rigorous application of statistical decision theory and makes explicit both the information available to agents ex ante and the way in which information is transmitted during any multistage allocation process.
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