King Solomon’s dilemma: an experiment on implementation in iterative elimination of (obviously) dominated strategies

Makoto Hagiwara and Fumihiro Yonekura ()
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Fumihiro Yonekura: Tokyo Institute of Technology

Review of Economic Design, 2024, vol. 28, issue 1, No 1, 19 pages

Abstract: Abstract “King Solomon’s dilemma” is based on a biblical story that can be considered an allocation problem for an indivisible good among two players. We experimentally compare the performance of the mechanism of Mihara (Jpn Econ Rev 63(3):420–429, 2012) with a modified version of his mechanism that we propose. Mihara’s mechanism uses a second-price auction, while we change it to an ascending clock auction. We find that the modified version performs relatively better than Mihara’s in terms of the right-player allocations, “resource inefficiency,” “wrong-player inefficiency,” and the equilibrium strategies of high valuation players. Regarding the first-best allocations and equilibrium strategies of low valuation players, in our experiment, there was a trend for improvement under the modified version relative to Mihara’s mechanism.

Keywords: King Solomon’s dilemma; Mihara’s mechanism; Ascending clock auctions; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D44 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10058-023-00328-8

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