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- W100856552 abstract "Publisher Summary This chapter discusses incentives and allocation mechanisms. When information is limited, there are additional incentive constraints upon economic policy and the feasible set of allocations that policy can bring about. There are also incentive constraints that arise from public authorities' limited control over market transactions because of tax evasion, black markets, the hidden economy, etc. Recognizing that policy makers have limited information is, therefore, an essential first step toward constructing a realistic welfare economic theory. The fundamental efficiency theorems of welfare economics depict the way in which first-best Pareto-efficient allocations and perfect competitive allocations in complete markets relate so closely to each other. Mirrlees showed how first-best allocations could well involve transfers from more to less skilled workers, sufficiently large to make the less skilled better off than the more skilled. This is troubling when workers are privately informed of their true skills because such an allocation gives them every incentive to conceal their true ability. The Mirrlees model also shows how private information makes it difficult to bring about some desirable allocations which are physically feasible." @default.
- W100856552 created "2016-06-24" @default.
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- W100856552 date "1990-01-01" @default.
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- W100856552 title "Incentives and Allocation Mechanisms**This paper is an extension of material presented in the first part of a lecture course for the Dutch PhD Network for Quantitative Economics in March, 1988. The latter part of the course was based on material to be found elsewhere. Helpful comments from Donald Brown, Robert Gilles, Marjan Hofkes, Paul Milgrom and Fernando Salas are gratefully acknowledged." @default.
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- W100856552 doi "https://doi.org/10.1016/b978-0-12-711703-4.50012-3" @default.
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