 Ex-post optimal knapsack procurementFelix Jarman and Vincent Meisner No 15-02, Working Papers from University of Mannheim, Department of Economics Abstract: We consider a budget-constrained mechanism designer who wants to select an optimal subset of projects to maximize her utility. Project costs are private information and the value the designer derives from their provision may vary. In this allocation problem the choice of projects - both which and how many - is endogenously determined by the mechanism. The designer faces hard ex-post constraints: The participation and budget constraint must hold for each possible outcome while the mechanism must be implementable in dominant strategies. We derive the class of optimal mechanisms that are characterized by cutoff functions. These cutoff functions exhibit properties that allow an implementation through a descending clock auction. Only in the case of symmetric projects price clocks descend synchronously such that always the cheapest projects are executed. However, the asymmetric case, where values or costs are asymmetrically distributed, features a novel tradeoff between quantity and quality. Interestingly, this tradeoff mitigates the distortion due to the informational asymmetry compared to environments where quantity is exogenous. Keywords: Mechanism Design; Knapsack; Budget; Procurement; Auction (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mnh:wpaper:37417 Access Statistics for this paper More papers in Working Papers from University of Mannheim, Department of Economics Contact information at EDIRC. |
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