A Characterization for Dominant Strategy Implementation

Jesse A. Schwartz () and Quan Wen ()
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Jesse A. Schwartz: Department of Economics, Finance, and Quantitative Analysis, Kennesaw State University, Kennesaw, GA 30144, USA

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2013, vol. 8, issue 1, 1-18

Abstract: We introduce a perfect price discriminating mechanism for allocation problems with private information. A perfect price discriminating mechanism treats a seller, for example, as a perfect price discriminating monopolist who faces a price schedule that does not depend on her report. In any perfect price discriminating mechanism, every player has a dominant strategy to truthfully report her private information.We establish a characterization for dominant strategy implementation: Any outcome that can be dominant strategy implemented can also be dominant strategy implemented using a perfect price discriminating mechanism. We apply this characterization to derive the optimal, budget-balanced, dominant strategy mechanisms for public good provision and bilateral bargaining.

Keywords: perfect price discriminating (PPD); dominant strategy implementation; Vickrey-Clarke-Grovesmechanisms; public good provision; bilateral bargaining (search for similar items in EconPapers)
JEL-codes: C72 C78 D44 D82 H41 (search for similar items in EconPapers)
Date: 2013
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