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Balanced ranking mechanisms

Yan Long, Debasis Mishra and Tridib Sharma

Games and Economic Behavior, 2017, vol. 105, issue C, 9-39

Abstract: In the private values single object auction model, we construct a satisfactory mechanism – a symmetric, dominant strategy incentive compatible, and budget-balanced mechanism. The mechanism converges to efficiency at an exponential rate. It allocates the object to the highest valued agent with more than 99% probability provided there are at least 14 agents. It is also ex-post individually rational. We show that our mechanism is optimal in a restricted class of satisfactory ranking mechanisms. Since achieving efficiency through a dominant strategy incentive compatible and budget-balanced mechanism is impossible in this model, our results illustrate the limits of this impossibility.

Keywords: Budget-balanced mechanisms; Green–Laffont mechanism; Pareto optimal mechanism (search for similar items in EconPapers)
JEL-codes: D82 D71 D02 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:gamebe:v:105:y:2017:i:c:p:9-39