Genericity and Robustness of Full Surplus Extraction

Abstract

We study whether priors that admit full surplus extraction (FSE) are generic, which 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 in Crémer and McLean (1988). We We thank the editor and anonymous referees for insightful comments which greatly improve the paper.

The e-mail game phenomenon

“…4 All of our results remain true if we adopt instead the solution concept of interim independent rationalizability studied in Morris and Skiadas (2000), Battigalli and Siniscalchi (2003), and Ely and Pȩ ski (2006). 5 In this paper, we follow , Ely and Pȩ ski (2011), Chen et al (2010Chen et al ( , 2012 to consider a class of games associated with a fixed set of payoff-relevant states Θ. More precisely, for different n-critical types, we demonstrate the strategic discontinuity by suitably varying the payoffs defined on the n × n × |Θ| profiles of actions and Θ.…”

“…The same definition is also used inHeifetz and Neeman (2006) andChen and Xiong (2013).10 Recall that T i endowed with the product topology is a compact metric space. Hence, the limit exists.…”