Mechanism Design with Interdependent Valuations: Surplus Extraction
AbstractIf valuations are interdependent and agents observe their own allocation payoffs, then two-stage revelation mechanisms expand the set of implementable decision functions. In a two-stage revelation mechanism agents report twice. In the first stage - before the allocation is decided - they report their private signals. In the second stage - after the allocation has been made, but before final transfers are decided - they report their payoffs from the allocation. Conditions are provided under which an uninformed seller can extract (or virtually extract) the full surplus from a sale to privately informed buyers, in spite of the buyers’ signals being independent random variables.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 05/1.
Date of creation: Feb 2005
Date of revision: Mar 2006
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Other versions of this item:
- Claudio Mezzetti, 2007. "Mechanism Design with Interdependent Valuations: Surplus Extraction," Economic Theory, Springer, Springer, vol. 31(3), pages 473-488, June.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-13 (All new papers)
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