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On the uniqueness of Groves mechanisms and the payoff equivalence principle

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  • Carbajal, Juan Carlos
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    Abstract

    Consider a standard mechanism design setting with quasi-linear preferences and private valuations. From Holmström (1979), we know that if the valuations are smooth with respect to types then any efficient, dominant strategy mechanism is in the class of Groves mechanisms. Here I show that, given regular assumptions on the primitives of the design problem, a weaker condition that includes the case of non-smooth valuations is sufficient and necessary for the uniqueness of Groves mechanisms among all efficient, dominant strategy mechanisms. This condition, which imposes a restriction on the behavior of the one-sided directional derivatives of the valuation functions with respect to individual types, is also shown to be sufficient and necessary to obtain the Payoff Equivalence principle for dominant strategy mechanisms whose choice rules are affine maximizers.

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    Bibliographic Info

    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 68 (2010)
    Issue (Month): 2 (March)
    Pages: 763-772

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    Handle: RePEc:eee:gamebe:v:68:y:2010:i:2:p:763-772

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    Web page: http://www.elsevier.com/locate/inca/622836

    Related research

    Keywords: Dominant strategy mechanisms Payoff equivalence principle Groves mechanisms Value function;

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    1. Holmstrom, Bengt, 1979. "Groves' Scheme on Restricted Domains," Econometrica, Econometric Society, vol. 47(5), pages 1137-44, September.
    2. Olszewski, Wojciech & Chung, Kim-Sau, 2007. "A non-differentiable approach to revenue equivalence," Theoretical Economics, Econometric Society, vol. 2(4), December.
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    9. Sushil Bikhchandani & Shurojit Chatterji & Ron Lavi & Ahuva Mu'alem & Noam Nisan & Arunava Sen, 2006. "Weak Monotonicity Characterizes Deterministic Dominant-Strategy Implementation," Econometrica, Econometric Society, vol. 74(4), pages 1109-1132, 07.
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    11. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    12. Birgit Heydenreich & Rudolf Müller & Marc Uetz & Rakesh V. Vohra, 2009. "Characterization of Revenue Equivalence," Econometrica, Econometric Society, vol. 77(1), pages 307-316, 01.
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    Cited by:
    1. Debasis Mishra & Anup Pramanik & Souvik Roy, 2013. "Implementation in multidimensional domains with ordinal restrictions," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 13-07, Indian Statistical Institute, New Delhi, India.
    2. Juan Carlos Carbajal & Jeffrey C. Ely, 2012. "Mechanism Design Without Revenue Equivalence," Discussion Papers Series 458, School of Economics, University of Queensland, Australia.
    3. Carbajal, Juan Carlos & Ely, Jeffrey C., 2013. "Mechanism design without revenue equivalence," Journal of Economic Theory, Elsevier, vol. 148(1), pages 104-133.

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