Private Information in Large Economies
This paper examines the effect of private information in large economies. We show that in a model with stochastic information structures, the restrictions imposed on allocations by the presence of private information disappear in large economies. We also show that for a large class of direct mechanisms, the incentive for any agent to falsely report private information goes to zero as the number of agents becomes large. These results provide an “informational smallness” analog to existing “quantity smallness” limiting results in the literature.