Econometrica: Mar 2013, Volume 81, Issue 2

Genericity and Robustness of Full Surplus Extraction

https://doi.org/10.3982/ECTA10123
p. 825-847

Yi‐Chun Chen, Siyang Xiong

We study whether priors that admit full surplus extraction (FSE) are generic, an issue that becomes a gauge to evaluate the validity of the current mechanism design paradigm. We consider the space of priors on the universal type space, and thereby relax the assumption of a fixed finite number of types made by Crémer and McLean (1988). We show that FSE priors are topologically generic, contrary to the result of Heifetz and Neeman (2006) that FSE is generically impossible, both geometrically and measure‐theoretically. Instead of using the BDP approach or convex combinations of priors adopted in Heifetz and Neeman (2006), we prove our genericity results by showing a robustness property of .

Log In To View Full Content

Supplemental Material

Supplement to "Genericity and Robustness of Full Surplus Extraction"

This supplement contains additional proofs for the manuscript.

Read More View PDF


Back