On Groves mechanisms for costly inclusion

Andrew Mackenzie and Christian Trudeau

Theoretical Economics, 2023, vol. 18, issue 3

Abstract: We investigate Groves mechanisms for economies where (i) a social outcome specifies a group of winning agents, and (ii) a cost function associates each group with a monetary cost. In particular, we characterize both (i) the class of cost functions for which there are Groves mechanisms such that the agents cover the costs through voluntary payments, and (ii) the class of cost functions for which there are envy-free Groves mechanisms. It follows directly from our results that whenever production efficient and envy-free allocations can be implemented in dominant strategies, this can moreover be done while funding production through voluntary payments.

Keywords: Costly inclusion; Groves mechanism; pivot mechanism; Vickrey auction; free-rider problem; labor markets (search for similar items in EconPapers)
JEL-codes: D24 D44 D47 D61 D63 D82 H41 (search for similar items in EconPapers)
Date: 2023-07-20
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Citations: View citations in EconPapers (1)

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Working Paper: On Groves Mechanisms for Costly Inclusion (2021)
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