## The communication requirements of efficient allocations and supporting prices (2006)

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Venue: | Journal of Economic Theory |

Citations: | 113 - 15 self |

### BibTeX

@ARTICLE{Nisan06thecommunication,

author = {Noam Nisan and Ilya Segal},

title = {The communication requirements of efficient allocations and supporting prices},

journal = {Journal of Economic Theory},

year = {2006},

volume = {129},

pages = {192--224}

}

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### Abstract

We show that any communication finding a Pareto efficient allocation in a private-information economy must also discover supporting Lindahl prices. In particular, efficient allocation of L indivisible objects requires naming a price for each of the 2 L ¡1 bundles. Furthermore, exponential communication in L is needed just to ensure a higher share of surplus than that realized by auctioning all items as a bundle, or even a higher expected surplus (for some probability distribution over valuations). When the valuations are submodular, efficiency still requires exponential communication (and fully polynomial approximation is impossible). When the objects are homogeneous, arbitrarily good approximation is obtained using exponentially less communication than that needed for exact efficiency.