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A Characterization for Dominant Strategy Implementation

Author

Listed:
  • Jesse A. Schwartz

    (Department of Economics, Finance, and Quantitative Analysis, Kennesaw State University, Kennesaw, GA 30144, USA)

  • Quan Wen

    (Department of Economics, Vanderbilt University, Nashville, TN 37235-1819, USA)

Abstract

We introduce a perfect price discriminating mechanism for allocation problems with private information. A perfect price discriminating mechanism treats a seller, for example, as a perfect price discriminating monopolist who faces a price schedule that does not depend on her report. In any perfect price discriminating mechanism, every player has a dominant strategy to truthfully report her private information.We establish a characterization for dominant strategy implementation: Any outcome that can be dominant strategy implemented can also be dominant strategy implemented using a perfect price discriminating mechanism. We apply this characterization to derive the optimal, budget-balanced, dominant strategy mechanisms for public good provision and bilateral bargaining.

Suggested Citation

  • Jesse A. Schwartz & Quan Wen, 2013. "A Characterization for Dominant Strategy Implementation," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 8(1), pages 1-18, March.
    • Handle: RePEc:fec:journl:v:8:y:2013:i:1:p:1-18
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-002-013-0001-3
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    More about this item

    Keywords

    perfect price discriminating (PPD); dominant strategy implementation; Vickrey-Clarke-Grovesmechanisms; public good provision; bilateral bargaining;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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