Strategy-proof market clearing mechanisms
AbstractConsider a market for a resource under disequilibrium prices where suppliers and demanders are privately informed about their optimal supply and consumption levels. Strategy-proof market clearing mechanisms give suppliers and demanders dominant strategy incentives to truthfully reveal this information. We describe the class of strategy-proof and efficient mechanisms responding well to changes in supplies and demands, as formalized by the "replacement principle" (Thomson, 2007). Since no symmetry or anonymity conditions are imposed, these mechanisms can implement a wide array of distributional objectives in both indivisible and divisible resource allocation situations. These mechanisms apply to allocation problems involving network constraints modeling necessary conditions for a transfer of the resource from a supplier to a demander.
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Bibliographic InfoPaper provided by Department of Business and Economics, University of Southern Denmark in its series Discussion Papers of Business and Economics with number 4/2014.
Length: 29 pages
Date of creation: 06 Mar 2014
Date of revision:
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Fax: 65 50 32 37
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Strategy-proofness; Replacement principle; Network constraints; Indivisible resourcces;
Find related papers by JEL classification:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D47 - Microeconomics - - Market Structure and Pricing - - - Market Design
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-22 (All new papers)
- NEP-CTA-2014-03-22 (Contract Theory & Applications)
- NEP-GTH-2014-03-22 (Game Theory)
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