On budget balance of the dynamic pivot mechanism

Kiho Yoon

Games and Economic Behavior, 2015, vol. 94, issue C, 206-213

Abstract: We modify the dynamic pivot mechanism of Bergemann and Välimäki (Econometrica, 2010) in such a way that lump-sum fees are collected from the players. We show that the modified mechanism satisfies ex-ante budget balance as well as ex-post efficiency, periodic ex-post incentive compatibility, and periodic ex-post individual rationality, as long as the Markov chain representing the evolution of players' private information is irreducible and aperiodic and players are sufficiently patient. We also show that the diverse preference assumption of Bergemann and Välimäki may preclude budget balance.

Keywords: The dynamic pivot mechanism; Dynamic mechanism design; Budget balance; VCG mechanism; Bilateral trading (search for similar items in EconPapers)
JEL-codes: C73 D47 D82 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: On Budget Balance of the Dynamic Pivot Mechanism (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:94:y:2015:i:c:p:206-213

DOI: 10.1016/j.geb.2015.07.001

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