Iterative Revelation Mechanisms

Ryuji Sano

No 937, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper considers dynamic resource allocation processes, called iterative revelation mechanisms, with quasi-linear dichotomous utilities and complete information. Agents gradually reveal their valuation through binary questions. The social planner identifies the efficient outcome, and monetary transfer is determined on a “pay-as-bid†basis. We show that the efficient allocation rule is implemented in a subgame perfect Nash equilibrium, regardless of details of a binary-question process. The analysis applies to the case with limited communication, and every strongly monotone allocation rule is implemented in equilibrium. We also show that if a resource allocation process is ex post incentive compatible, it is an ascending-price mechanism. In a single-object allocation problem, the English auction is a unique mechanism satisfying efficiency, ex post incentive compatibility, and pay-as-bid transfer.

Keywords: iterative revelation mechanism; limited communication; ascending price; English auction (search for similar items in EconPapers)
JEL-codes: D44 D71 D82 D83 H41 (search for similar items in EconPapers)
Pages: 30pages
Date: 2016-03
New Economics Papers: this item is included in nep-gth and nep-mic
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