Feasible Bayesian Implementation with State Dependent Feasible Sets

Abstract

This paper considers feasible Bayesian implementation for an environment with state dependent feasible sets. We assume no externality in individual feasibility constraint sets and no exaggeration on the part of agents, but allow for flexible information structures. Bayesian Incentive Compatibility, Closure, and Bayesian Monotonicity are found to be necessary and sufficient for feasible Bayesian implementation. This result is applied to an exchange economy where agents have fixed preferences but uncertain initial endowments and complete information. A condition called the Endowment Condition, which is weaker than Individual Rationality, is identified as necessary and sufficient for feasible Nash implementation.Journal of Economic LiteratureClassification Numbers: D70; D71; D74; D82. © 1998 Academic Press.