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Dynamic Marginal Contribution Mechanism

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Author Info
Dirk Bergemann () (Cowles Foundation, Yale University)
Juuso Valimaki (Dept. of Economics, Helsinki School of Economics)

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Abstract

We consider truthful implementation of the socially efficient allocation in a dynamic private value environment in which agents receive private information over time. We propose a suitable generalization of the Vickrey-Clarke-Groves mechanism, based on the marginal contribution of each agent. In the marginal contribution mechanism, the ex post incentive and ex post participations constraints are satisfied for all agents after all histories. It is the unique mechanism satisfying ex post incentive, ex post participation and efficient exit conditions. We develop the marginal contribution mechanism in detail for a sequential auction of a single object in which each bidders learn over time her true valuation of the object. We show that a modified second price auction leads to truthtelling.

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File URL: http://cowles.econ.yale.edu/P/cd/d16a/d1616.pdf
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Publisher Info
Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number 1616.

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Length: 30 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:cwl:cwldpp:1616

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Related research
Keywords: Vickrey-Clarke-Groves mechanism Pivot mechanism Ex post equilibrium Marginal contribution Multi-armed bandit Bayesian learning

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Susan Athey & Ilya Segal, 2007. "Designing Efficient Mechanisms for Dynamic Bilateral Trading Games," Levine's Bibliography 321307000000000892, UCLA Department of Economics. [Downloadable!]
  2. Susan Athey & Ilya Segal, 2007. "Designing Efficient Mechanisms for Dynamic Bilateral Trading Games," American Economic Review, American Economic Association, vol. 97(2), pages 131-136, May.
  3. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May. [Downloadable!] (restricted)
    Other versions:
  4. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July. [Downloadable!] (restricted)
  5. Freixas, Xavier & Guesnerie, Roger & Tirole, Jean, 1985. "Planning under Incomplete Information and the Ratchet Effect," Review of Economic Studies, Blackwell Publishing, vol. 52(2), pages 173-91, April. [Downloadable!] (restricted)
  6. Bergemann, Dirk & Valimaki, Juuso, 2003. "Dynamic common agency," Journal of Economic Theory, Elsevier, vol. 111(1), pages 23-48, July. [Downloadable!] (restricted)
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  7. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2005. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," NBER Working Papers 11765, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Said, Maher, 2008. "Information Revelation and Random Entry in Sequential Ascending Auctions," MPRA Paper 7160, University Library of Munich, Germany, revised 14 May 2008. [Downloadable!]
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