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A Characterization for Dominant Strategy Implementation |
Jesse A. Schwartz1(), Quan Wen2() |
1. Department of Economics, Finance, and Quantitative Analysis, Kennesaw State University, Kennesaw, GA 30144, USA; 2. Department of Economics, Vanderbilt University, Nashville, TN 37235-1819, USA |
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Abstract We introduce a perfect price discriminating mechanism for allocation problems with private information. A perfect price discriminating mechanism treats a seller, for example, as a perfect price discriminating monopolist who faces a price schedule that does not depend on her report. In any perfect price discriminating mechanism, every player has a dominant strategy to truthfully report her private information.We establish a characterization for dominant strategy implementation: Any outcome that can be dominant strategy implemented can also be dominant strategy implemented using a perfect price discriminating mechanism. We apply this characterization to derive the optimal, budget-balanced, dominant strategy mechanisms for public good provision and bilateral bargaining.
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Keywords
perfect price discriminating (PPD)
dominant strategy implementation
Vickrey-Clarke-Groves mechanisms
public good provision
bilateral bargaining
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Corresponding Author(s):
Jesse A. Schwartz,Email:jschwar7@kennesaw.edu; Quan Wen,Email:quan.wen@vanderbilt.edu
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Issue Date: 05 March 2013
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