A Characterization for Dominant Strategy Implementation

Jesse A. Schwartz, Quan Wen

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PDF(376 KB)
Front. Econ. China ›› 2013, Vol. 8 ›› Issue (1) : 1-18. DOI: 10.3868/s060-002-013-0001-3
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A Characterization for Dominant Strategy Implementation

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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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perfect price discriminating (PPD) / dominant strategy implementation / Vickrey-Clarke-Groves mechanisms / public good provision / bilateral bargaining

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Jesse A. Schwartz, Quan Wen. A Characterization for Dominant Strategy Implementation. Front Econ Chin, 2013, 8(1): 1‒18 https://doi.org/10.3868/s060-002-013-0001-3

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2014 Higher Education Press and Brill
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