The concepts of "rational conjectures" and "reasonable conjectures" are cr itically reviewed. It is shown that their operation depends crucially on an invisible, nonoptimizing "deus ex machina." Hence, these con cepts are not really suitable for understanding competition among opt imizing firms....

We show that efficient anonymous incentive compatible (dominant strategy) mechanisms for public goods eliminate externalities, i.e., each individual is unable to change the welfare of anyone else. The characterization is used to derive existence and non-existence results for models with a finite...