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Efficient dynamic mechanisms with interdependent valuations

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  • He, Wei
  • Li, Jiangtao

Abstract

This paper considers a dynamic environment with interdependent valuations and evolving private information. Under the assumption of “independent types”, we construct an efficient, incentive-compatible mechanism that is also budget-balanced in every period of the game. Our mechanism works in environments where in each period, each agent observes her own realized outcome-decision payoff from the previous period. This extends the insight of Mezzetti (2004) to the dynamic setting.

Suggested Citation

  • He, Wei & Li, Jiangtao, 2016. "Efficient dynamic mechanisms with interdependent valuations," Games and Economic Behavior, Elsevier, vol. 97(C), pages 166-173.
    • Handle: RePEc:eee:gamebe:v:97:y:2016:i:c:p:166-173
    DOI: 10.1016/j.geb.2016.04.008
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    More about this item

    Keywords

    Dynamic mechanism design; Efficiency; Observable payoff; Incentive compatibility; Budget balance;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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