A Characterization for Dominant Strategy Implementation |
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Authors: | Jesse ASchwartz Quan Wen |
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Institution: | 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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