Incentive compatibility with interdependent preferences


  • Marialaura Pesce,

    1. Dipartimento di Matematica e Statistica, Università di Napoli Federico II, and CSEF, Napoli 81026, Italy.
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  • Nicholas C. Yannelis

    1. Department of Economics, Henry B. Tippie College of Business, The University of Iowa, 108 John Pappajohn Business Building Iowa City, IA 52242-1994, USA, and Economics – School of Social Sciences, The University of Manchester, Oxford Road, Manchester M13 9PL, UK. Email:
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  • To the memory of Lionel W. McKenzie. He was the first to introduce in a rigorous way interdependent preferences in general equilibrium theory (see McKenzie 1955).


We introduce new concepts of incentive compatibility and efficiency for a differential information economy with interdependent preferences. Using the new definitions, we provide theorems on the consistency of efficiency and incentive compatibility.