Choosing Wisely: The Natural Multi-Bidding Mechanism

Lars Ehlers

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: Pérez-Castrillo and Wettstein (2002) propose a multi-bidding mechanism to determine a winner from a set of possible projects. The winning project is implemented and its surplus is shared among the agents. In the multi-bidding mechanism each agent announces a vector of bids, one for each possible project, that are constrained to sum up to zero. In addition, each agent chooses a favorite a object which is used as a tie-breaker if several projects receive the same highest aggregate bid. Since more desirable projects receive larger bids, it is natural to consider the multi-bidding mechanism without the announcement of favorite projects. We show that the merits of the multi-bidding mechanism appear not to be robust to this natural simplification. Specifically, a Nash equilibrium exists if and only if there are at least two individually optimal projects and all individually optimal projects are efficient.

Keywords: (natural) multi-bidding mechanism; existence; efficiency (search for similar items in EconPapers)
JEL-codes: D62 D78 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2005
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Related works:
Journal Article: Choosing wisely: the natural multi-bidding mechanism (2009)
Working Paper: Choosing Wisely: The Natural Multi-Bidding Mechanism (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:18-2005

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