DOI: 10.1007/s00199-004-0497-1 Economic Theory 26, 361–381 (2005) Characterization and incentive compatibility of Walrasian expectations equilibrium in infinite dimensional commodity spaces ⋆ Carlos Herv´ es-Beloso 1 , Emma Moreno-Garc´ ıa 2 , and Nicholas C. Yannelis 3 1 RGEA, Facultad de Econ´ omicas, Universidad de Vigo, 36310Vigo, SPAIN (e-mail: cherves@uvigo.es) 2 Facultad de Econom´ ıa y Empresa, Universidad de Salamanca, Campus Miguel de Unamuno, 37007 Salamanca, SPAIN (e-mail: emmam@usal.es) 3 Department of Economics, University of Illinois at Urbana-Champaign, Champaign, IL 61820, USA (e-mail: nyanneli@uiuc.edu) Received: October 29, 2003; revised version: February 24, 2004 Summary. We consider a differential information economy with infinitely many commodities and analyze the veto power of the grand coalition with respect the ability of blocking non-Walrasian expectations equilibrium allocations. We pro- vide two different Walrasian expectations equilibrium equivalence results. First by perturbing the initial endowments in a precise direction we show that an allocation is a Walrasian expectations equilibrium if and only if it is not “privately dominated” by the grand coalition. The second characterization deals with the fuzzy veto in the sense ofAubin but within a differential information setting. This second equivalence result provides a different characterization for the Walrasian expectations equilib- rium and shows that the grand coalition privately blocks in the sense of Aubin any non Walrasian expectations equilibrium allocation with endowment participation rate arbitrarily close to the total initial endowment participation for every individ- ual. Finally, we show that any no free disposal Walrasian expectations equilibria is coalitional Bayesian incentive compatible. Since the deterministic Arrow-Debreu- McKenzie model is a special case of the differential information economy model, one derives new characterizations of the Walrasian equilibria in economies with infinitely many commodities. ⋆ The authors are grateful to an anonymous referee for his/her careful reading and helpful comments and suggestions. C. Herv´ es and E. Moreno acknowledge support by Research Grant BEC2000-1388-C04-01 (Ministerio de Ciencia y Tecnolog´ ıa and FEDER); and support by the Research Grant SA091/02 (Junta de Castilla y Le ´ on). Correspondence to: E. Moreno-Garc´ ıa