The second-price auction solves King Solomon's dilemma
H. Reiju Mihara
MPRA Paper from University Library of Munich, Germany
Consider the problem of allocating k identical, indivisible objects among n agents, where k is less than n. The planner's objective is to give the objects to the top k valuation agents at zero costs to the planner and the agents. Each agent knows her own valuation of the object and whether it is among the top k. Modify the (k+1)st-price sealed-bid auction by introducing a small participation fee and the option not to participate in it. This strikingly simple mechanism (modified auction) implements the desired outcome in iteratively weakly undominated strategies. Moreover, no pair of agents can profitably deviate from the equilibrium by coordinating their strategies or bribing each other.
Keywords: Solomon's problem; implementation; entry fees; Olszewski's mechanism; collusion; bribes (search for similar items in EconPapers)
JEL-codes: D71 D61 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/8801/1/MPRA_paper_8801.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/31962/1/MPRA_paper_31962.pdf revised version (application/pdf)
Journal Article: THE SECOND-PRICE AUCTION SOLVES KING SOLOMON'S DILEMMA (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8801
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Series data maintained by Joachim Winter ().