Local incentive compatibility in non-convex type-spaces

Roy, Souvik and Kumar, Ujjwal (2021): Local incentive compatibility in non-convex type-spaces.

Abstract

We explore the equivalence of local incentive compatibility (LIC) (Carroll (2012)) and incentive compatibility (IC) in non-convex type-spaces. We provide a sufficient condition on a type-space called minimal richness for the said equivalence. Using this result, we show that LIC and IC are equivalent on large class of non-convex type-spaces such as type-spaces perturbed by modularity and concave-modularity. The gross substitutes type-space and the generalized gross substitutes and complements type-space are important examples of type-spaces perturbed by modularity and concave-modularity, respectively. Finally, we provide a geometric property consisting of three conditions for the equivalence of LIC and IC, and show that all the conditions are indispensable.

• Item Type: MPRA Paper
• Language: English
• Keywords: local incentive compatibility, (global) incentive compatibility, non-convex type-spaces, minimally rich type-spaces, gross substitutes type-space, generalized gross substitutes and complements type-space
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D47 - Market Design; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design

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