Ex post efficiency

In general, the intermediary ensures that mechanism T P p,w) is ex post efficient while balancing the budget (otherwise, the intermediary is to call off the trade). The above procedure offers a general mechanism design framework for supply chain intermediation. In the following section, we use this framework to consider a few different settings. 

In bilateral bargaining with incomplete information (Figure 3. l-(b)), the supplier and the buyer hold private information s G [si,S2],v G [vi V2] as defined above with ex ante distributions F s) and G(v), respectively. The intermediary decides if the trade is to take place (/ (5, v)). If so, she collects p(s, v) from the buyer and pay w s, v) to the supplier. The intermediary determines P, p, w to maximize a certain function sub-ject to incentive compatibility, individual rationality, and ex post efficiency (see Section 5). 

The intermediary must ensure that mechanism F(/ , p, w) is ex post efficient. 

A mechanism is ex post efficient iff the buyer gets the object whenever her valuation v is higher than the supplier s cost s, otherwise the trade is not taking place. Using Theorem 2, Myerson and Satterthwaite (1983) shows that it is possible to construct an ex post efficient mechanism so long as the trade is subsidized by an intermediary as needed. Specifically,... 

Authors thank Bogazici University Research Fund for supporting the Project (08HN201) titled "Ex-Post Efficiency Analysis of European and Internationally Funded Projects". 

Ex post examination of information is more efficient than an ex ante provision if the net benefits of the former are greater. At first glance, the tort system s ex post examination seems to have greater net benefits because the expense of informing people when damages do not occur is avoided, although savings in chemical cases are less than they appear because the problem of disease latency makes it necessary to inform all people who are exposed and not only those who become ill. 

The reality of a multi-period emissions trading scheme with free allocation for new installations in connection with the (mainly policy-driven) attempt to avoid shut-down premiums for plant closure demonstrates that the allocation rules could have a considerable influence upon the efficiency of the emission trading system. As a result of differentiated new plant allocations, as well as a series of ex-post adjustments, an erosion in the CO2 price signal for operational or investment decisions by the economic entities within the scope of the EU ETS could arise. The development of the allocation provisions for new entrants is one of the key decisions for future NAPs. 

It seems reasonable that planners in North American democracies need not respect individual beliefs about future possibilities in the same manner as they respect individual tastes. Tastes may be refined or vulgar still, it may be held that a person s tastes must be respected. Beliefs, however, can be wrong and it may be very costly to correct them. In these circumstances, a planner might make decisions about Q-goods on this basis of his expectations of the individual s ex post utility level. Existence value would then be the planner s perception of differences in the individual s ex post utility level, where the planner s ex ante beliefs have been substituted for the individual s. The usual economic efficiency (Pareto optimality) conditions would still apply. The danger of paternalism in which the planner substitutes his own tastes for those of the individual is acknowledged. In addition, account would have to be taken of the accuracy and precision of the planner s knowledge of world states and the individual s tastes. 

Anticipating an event and experiencing it are not the same What is the value for a film producer of a sweep of the Academy Awards It would certainly be possible to survey producers in advance and gauge their expectations, but this would not be very efficient or accurate. Why not simply look at the revenues for films that have won awards in the past - that is, use actual rather than anticipated results By the same token, why should we search for the value of life and health in the expectations of individuals who have little experience with the serious possibility of loss Of course, economists in this life cannot survey the victims of fatal occupational injuries and diseases, but they can study people who have come close to such an end, and they can consult with family and friends regarding their loss. Moreover, there is no impediment to research on victims of nonfatal outcomes. In a sense, this ex post approach to the value of life and well-being is implicit in the problem of public rescue episodes mentioned above many hazards command a far greater public value after they have materialized than before. 

There are two ways workers can be compensated for risk on the job. They can receive compensation in advance ex ante) for taking on the risk, before they know whether or not they will actually be hurt. They can also be compensated after the fact (ex post), in which case only those workers who suffered injuries or illnesses (or their estates) will receive the extra money. These two forms of compensation serve the same functions, equity and efficiency, and workers should be generally indifferent over which form is adopted. To see this more clearly, let us return to our simplified world in which workers are equivalent in all respects, labor markets are competitive, and jobs differ only with respect to the risk of an accident. The utility a worker derives from a job can be represented as... 

The uniqueness of Groves mechanisms provides an additional simplification to the efficient mechanism design problem when dominant strategy implementations are required. It is sufficient to consider the family of Groves mechanisms, and look for functions hi -) that provide Groves payments that satisfy all of the desired constraints. The Vickrey-Clarke-Groves (VCG) mechanism is an important special case, so named because it reflects the seminal ideas due to Vickrey [100] and Clarke [26]. The VCG mechanism maximizes expected revenue across all strategyproof efficient mechanisms, subject to ex post individual-rationality (IR) constraints. Ex post IR provides ... 

Now, amongst all auctions that produce the efficient allocation, are ex-post individually rational, in which bidding truthfully is a dominant strategy, which one maximizes the revenue of the auctioneer The answer to this question was provided by Groves [35] and Clarke [16] with the impetus coming from Vickrey s seminal 1961 paper [66]. For this reason the auction is called the Vickrey-Clarke-Groves mechanism or VCG for short. We show how to derive it using the ideas described above. 

Given the algorithm terminates with the efficient allocation and gives each buyer their marginal product, it follows immediately that bidding truthfully is an ex-post Nash equilibrium of the auction. 

The choice of a payment system is clearly influenced by the objectives such as quality of care, cost, and patient-throughput. However, with multiple stakeholders, the objectives may often be in conflict. In general, the ex post elements of the payment system perform better in terms of access, provider risk, revenue, and quality, while the ex ante elements do better in establishing the optimal levels of services, efficiency, and cost. 

Another aspect of ttie just mentioned complementarity is the ability with which the Cl and CC approaches account for the dynamic and nondynamic correlations. As alluded to above, the Cl approaches are very efficient in handling of the latter, already at a low-dimensional level, while the dynamic correlation requires the inclusion of a large number of highly-excited configurations, thus making unrealistic demands on the dimensionality of the Cl matrices one has to handle. For this very reason, even at the MR level, the Cl results are invariably corrected ex post by relying on various semi-empirical Davidson-type corrections. 

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