Mihara, H. Reiju (2011): The second-price auction solves King Solomon's dilemma. Forthcoming in: Japanese Economic Review
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The planner wants to give k identical, indivisible objects to the top k valuation agents at zero costs. Each agent knows her own valuation of the object and whether it is among the top k. Modify the (k+1)st-price sealed-bid auction by introducing a small participation fee and the option not to participate in it. This simple mechanism implements the desired outcome in iteratively undominated strategies. Moreover, no pair of agents can profitably deviate from the equilibrium by coordinating their strategies or bribing each other.
|Item Type:||MPRA Paper|
|Original Title:||The second-price auction solves King Solomon's dilemma|
|Keywords:||Solomon’s problem; mechanism design; implementation; iterative elimination of weakly dominated strategies; entry fees; Olszewski’s mechanism; collusion; bribes|
|Subjects:||D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice; Clubs; Committees; Associations
D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency; Cost-Benefit Analysis
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||H. Reiju Mihara|
|Date Deposited:||01. Jul 2011 20:05|
|Last Modified:||20. Feb 2013 13:40|
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The second-price auction solves King Solomon's dilemma. (deposited 21. May 2008 07:31)
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