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REVELATION MECHANISMS AND ALLOCATIVE EFFICIENCY
Author(s) -
Plassmann Florenz,
Tideman Nicolaus
Publication year - 2019
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12799
Subject(s) - allocative efficiency , incentive , microeconomics , economics , revenue , value (mathematics) , revelation , property (philosophy) , mechanism (biology) , public economics , finance , computer science , art , philosophy , literature , epistemology , machine learning
We show that revelation mechanisms affect owners' valuations of the assets they own and that different mechanisms provide owners with the incentive to reveal—truthfully—different valuations. Self‐assessment of property with compulsory sale at the self‐assessed price is the only known mechanism that promotes allocative efficiency by providing efficient incentives for transferring property to those who value it most. We introduce two modifications of the standard self‐assessment mechanism that maintain full incentives to invest and raise as much public revenue as can be raised efficiently. ( JEL D61, D82, H21, K11)