A characterization of the existenceof optimal dominant strategy mechanisms

Liqun Liu () and Guoqiang Tian
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Liqun Liu: Department of Economics, Texas A&M University, College Station, TX 77843, USA

Review of Economic Design, 1999, vol. 4, issue 3, 205-218

Abstract: This paper provides two theorems which characterize the domains of valuation functions for which there exist Pareto efficient and truth dominant strategy mechanisms (balanced Groves mechanisms). Theorem 1 characterizes the existence of balanced Groves mechanisms for a general class of valuation functions. Theorem 2 provides new balance-permitting domains of valuation functions by reducing the problem of solving partial differential equations to the problem of solving a polynomial function. It shows that a balanced Groves mechanism exists if and only if each valuation function in the family under consideration can be obtained by solving a polynomial function with order less than $n-1$, where n is the number of individuals.

Keywords: Groves mechanisms; dominant strategy implementation (search for similar items in EconPapers)
JEL-codes: C72 D71 D82 H41 (search for similar items in EconPapers)
Date: 1999-09-24
Note: Received: 5 January 1997 / Accepted: 25 May 1999
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