A symmetric allocation in a continuum is "multilaterally incentive compatible" if no finite coalition of privately informed agents can manipulate it by combining deception with hidden trades of exchangeable goods. Sufficient conditions for mutilateral compatibility are that all agents face the same linear prices for exchangeable goods and that indistinguishable agents face identical budget sets. The same conditions are necessary under assumptions that extend those under which the second efficiency theorem of welfare economics holds in a continuum economy. Markets for exchangeable goods emerge as binding constraints on the set of Pareto efficient allocations with private information.

Symposium on Incentive Compatibility: Introduction Get access Peter J. Hammond Peter J. Hammond University of Essex Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 2, April 1979, Pages 181–184, https://doi.org/10.2307/2297044 Published: 01 April 1979

Journal Article Straightforward Individual Incentive Compatibility in Large Economies Get access Peter J. Hammond Peter J. Hammond University of Essex Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 2, April 1979, Pages 263–282, https://doi.org/10.2307/2297050 Published: 01 April 1979 Article history Received: 01 December 1976 Accepted: 01 September 1978 Published: 01 April 1979

Journal Article Economic Welfare with Rank Order Price Weighting Get access Peter J. Hammond Peter J. Hammond University of Essex Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 45, Issue 2, June 1978, Pages 381–384, https://doi.org/10.2307/2297353 Published: 01 June 1978 Article history Received: 01 February 1977 Accepted: 01 October 1977 Published: 01 June 1978

Journal Article Changing Tastes and Coherent Dynamic Choice Get access Peter J. Hammond Peter J. Hammond University of Essex Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 43, Issue 1, February 1976, Pages 159–173, https://doi.org/10.2307/2296609 Published: 01 February 1976 Article history Received: 01 November 1974 Accepted: 01 April 1975 Published: 01 February 1976

[Suppose that social choice is based on interpersonal comparisons of welfare levels. Suppose too that, whenever all but two persons are indifferent between two options, a choice is made between these options which is equitable, in some sense. Then provided that individual welfare functions are unrestricted, and social choice is independent of irrelevant alternatives, it follows that social choice is always equitable, in the same sense. This applies when equity means satisfying Suppes' indifference rule, or Suppes' original justice criterion, or the lexicographic extension of Rawls' difference principle.]

An Arrow social welfare function was designed not to incorporate any interpersonal comparisons. But some notions of equity rest on interpersonal comparisons. It is shown that a generalized social welfare function, incorporating interpersonal comparisons, can satisfy modifications of the Arrow conditions, and also a strong version of an equity axiom due to Sen. One such generalized social welfare function is the lexicographic form of Rawls' ARRow (1) INVESTIGATED the problem of how to amalgamate the personal welfare orderings of the members of a society into a social welfare ordering. His approach was deliberately designed to avoid making any kind of interpersonal comparison. He was then able to show that such an approach must fail as long as one insists on certain other apparently appropriate conditions. It would therefore seem that an obvious way around Arrow's impossibility theorem is to make interpersonal comparisons and to use them in the construc- tion of a social ordering. Moreover, some considerations of equity which many people would think relevant for making social choices are specifically excluded by Arrow's approach. This paper shows how, if interpersonal comparisons are made in a certain way, one can construct a social welfare ordering by a method which satisfies suitably modified forms of Arrow's 1963 conditions. Moreover-as is just as well, given that the interpersonal comparisons are deliberately based on a notion of equity- it is also possible to satisfy an extra condition, which is a kind of equity axiom. The lexicographic extension of Rawls' difference principle, or maximin rule, satisfies all these conditions. In addition, it is the only rule or principle which satisfies a condition which underlies Suppes' grading principle, together with these condi- tions. Section 2 presents preliminary definitions and notation, and shows how some considerations of equity are excluded by Arrow's approach to social choice. Section 3 shows how these considerations of equity may be represented by ordinal interpersonal comparisons of the kind discussed in Sen (6), how they are related to an equity axiom due to Sen (7), and how Sen's equity axiom may be generalized. Section 4 defines generalized social welfare functions (GSWF's) and shows how Arrow's conditions can be modified to apply to GSWF's. Section 5 'This is an expanded and subsequently revised version of a paper presented to the European

This paper extends the affine class of term structure models to describe the joint dynamics of exchange rates and interest rates. In particular, the issue of how to reconcile the low volatility of interest rates with the high volatility of exchange rates is addressed. The incomplete market approach of introducing exchange rate volatility that is orthogonal to both interest rates and the pricing kernels is shown to be infeasible in the affine setting. Models in which excess exchange rate volatility is orthogonal to interest rates but not orthogonal to the pricing kernels are proposed and validated via Kalman filter estimation of maximal 5-factor models for 6 country pairs.