Local incentive compatibility with transfers

Article Type

Research Article

Publication Title

Games and Economic Behavior

Abstract

We consider locally incentive compatible mechanisms with deterministic allocation rules and transfers with quasilinear utility. We identify a rich class of type spaces, which includes the single peaked type space, where local incentive compatibility does not imply incentive compatibility. Our main result shows that in such type spaces, a mechanism is locally incentive compatible and payment-only incentive compatible if and only if it is incentive compatible. Payment-only incentive compatibility requires that a mechanism that generates the same allocation at two types must have the same payment at those two types. Our result works on a class of ordinal type spaces, which are generated by considering a set of ordinal preferences over alternatives and then considering all non-negative type vectors representing such preferences.

First Page

149

Last Page

165

DOI

10.1016/j.geb.2016.09.009

Publication Date

11-1-2016

Comments

Open Access; Green Open Access

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