Optimal Deterministic Mechanism Design: Type‐Independent Preference Orderings

Hitoshi Matsushima

The Japanese Economic Review, 2018, vol. 69, issue 4, 363-373

Abstract: We investigate revenue maximisation in general allocation problems with incomplete information, where we assume quasi‐linearity, private values, independent type distributions and single‐dimensionality of type spaces. We require a mechanism to be deterministic, strategy‐proof and ex‐post individually rational. We assume that each player has a type‐independent preference ordering over deterministic allocations. We show that the Myerson's technique to solve the incentive‐constrained revenue maximisation problem in single‐unit auctions can be applied to general allocation problems, where the incentive‐constrained revenue maximisation problem can be reduced to the simple maximisation problem of the sum of players’ virtual valuations without imposing any incentive constraint.

Date: 2018
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https://doi.org/10.1111/jere.12176

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