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Smooth multibidding mechanisms

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  • Pérez-Castrillo, David
  • Quérou, Nicolas

Abstract

We propose a smooth multibidding mechanism for environments where a group of agents have to choose one out of several projects. Our proposal is related to the multibidding mechanism (Pérez-Castrillo and Wettstein, 2002) but it is “smoother” in the sense that small variations in an agentʼs bids do not lead to dramatic changes in the probability of selecting a project. This mechanism is shown to possess several interesting properties. First, the equilibrium outcome is unique. Second, it ensures an equal sharing of the surplus that it induces. Finally, it enables reaching an outcome as close to efficiency as is desired.

Suggested Citation

  • Pérez-Castrillo, David & Quérou, Nicolas, 2012. "Smooth multibidding mechanisms," Games and Economic Behavior, Elsevier, vol. 76(2), pages 420-438.
    • Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:420-438
    DOI: 10.1016/j.geb.2012.07.003
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    More about this item

    Keywords

    Mechanism design; NIMBY;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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