Balanced ranking mechanisms

Article Type

Research Article

Publication Title

Games and Economic Behavior

Abstract

In the private values single object auction model, we construct a satisfactory mechanism – a symmetric, dominant strategy incentive compatible, and budget-balanced mechanism. The mechanism converges to efficiency at an exponential rate. It allocates the object to the highest valued agent with more than 99% probability provided there are at least 14 agents. It is also ex-post individually rational. We show that our mechanism is optimal in a restricted class of satisfactory ranking mechanisms. Since achieving efficiency through a dominant strategy incentive compatible and budget-balanced mechanism is impossible in this model, our results illustrate the limits of this impossibility.

First Page

9

Last Page

39

DOI

10.1016/j.geb.2017.07.002

Publication Date

9-1-2017

Comments

Open Access, Green

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