A strict ex-post incentive compatible mechanism for interdependent valuations

Swaprava Nath and Onno Zoeter

Economics Letters, 2013, vol. 121, issue 2, 321-325

Abstract: The impossibility result by Jehiel and Moldovanu says that in a setting with interdependent valuations, any efficient and ex-post incentive compatible mechanism must be a constant mechanism. Mezzetti circumvents this problem by designing a two stage mechanism where the decision of allocation and payment are split over the two stages. This mechanism is elegant, however it has a major weakness. In the second stage, agents are weakly indifferent about reporting their valuations truthfully: an agent’s payment is independent of her reported valuation and truth-telling for this stage is by assumption. We propose a modified mechanism which makes truthful reporting in the second stage a strict equilibrium.

Keywords: Interdependent value; Ex-post incentive compatibility; Efficient mechanisms; Ex-post individual rationality (search for similar items in EconPapers)
JEL-codes: D51 D82 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:121:y:2013:i:2:p:321-325

DOI: 10.1016/j.econlet.2013.08.033

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