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Frontiers of Economics in China

Front Econ Chin    2013, Vol. 8 Issue (1) : 1-18
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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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.

Keywords perfect price discriminating (PPD)      dominant strategy implementation      Vickrey-Clarke-Groves mechanisms      public good provision      bilateral bargaining     
Corresponding Author(s): Jesse A. Schwartz,; Quan Wen,   
Issue Date: 05 March 2013
 Cite this article:   
Jesse A. Schwartz,Quan Wen. A Characterization for Dominant Strategy Implementation[J]. Front Econ Chin, 2013, 8(1): 1-18.
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