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The Incompatibility of Pareto Optimality and Dominant-Strategy Incentive Compatibility in Sufficiently-Anonymous Budget-Constrained Quasilinear Settings

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  • Rica Gonen

    (Department of Management and Economics, The Open University of Israel, 1 University Road, Raanana 43537, Israel)

  • Anat Lerner

    (Department of Mathematics and Computer Science, The Open University of Israel, 1 University Road, Raanana 43537, Israel)

Abstract

We analyze the space of deterministic, dominant-strategy incentive compatible, individually rational and Pareto optimal combinatorial auctions. We examine a model with multidimensional types, nonidentical items, private values and quasilinear preferences for the players with one relaxation; the players are subject to publicly-known budget constraints. We show that the space includes dictatorial mechanisms and that if dictatorial mechanisms are ruled out by a natural anonymity property, then an impossibility of design is revealed. The same impossibility naturally extends to other abstract mechanisms with an arbitrary outcome set if one maintains the original assumptions of players with quasilinear utilities, public budgets and nonnegative prices.

Suggested Citation

  • Rica Gonen & Anat Lerner, 2013. "The Incompatibility of Pareto Optimality and Dominant-Strategy Incentive Compatibility in Sufficiently-Anonymous Budget-Constrained Quasilinear Settings," Games, MDPI, vol. 4(4), pages 1-21, November.
    • Handle: RePEc:gam:jgames:v:4:y:2013:i:4:p:690-710:d:30533
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    References listed on IDEAS

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    1. Anat Lerner & Rica Gonen, 2014. "Characterizing the Incentive Compatible and Pareto Optimal Efficiency Space for Two Players, k Items, Public Budget and Quasilinear Utilities," Games, MDPI, vol. 5(2), pages 1-19, April.

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