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Choosing Wisely: The Natural Multi-Bidding Mechanism

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EHLERS, Lars

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Abstract

Pérez-Castrillo and Wettstein (2002) propose a multi-bidding mechanism to determine a winner from a set of possible projects. The winning project is implemented and its surplus is shared among the agents. In the multi-bidding mechanism each agent announces a vector of bids, one for each possible project, that are constrained to sum up to zero. In addition, each agent chooses a favorite a object which is used as a tie-breaker if several projects receive the same highest aggregate bid. Since more desirable projects receive larger bids, it is natural to consider the multi-bidding mechanism without the announcement of favorite projects. We show that the merits of the multi-bidding mechanism appear not to be robust to this natural simplification. Specifically, a Nash equilibrium exists if and only if there are at least two individually optimal projects and all individually optimal projects are efficient.

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Publisher Info
Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 2005-14.

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Length: 27 pages
Date of creation: 2005
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Handle: RePEc:mtl:montde:2005-14

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Related research
Keywords: (natural) multi-bidding mechanism; existence; efficiency;

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Find related papers by JEL classification:
D62 - Microeconomics - - Welfare Economics - - - Externalities
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation

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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. Vidal-Puga, Juan & Bergantinos, Gustavo, 2003. "An implementation of the Owen value," Games and Economic Behavior, Elsevier, vol. 44(2), pages 412-427, August. [Downloadable!] (restricted)
  2. Róbert F. Veszteg, 2004. "Multibidding Game under Uncertainty," Faculty Working Papers 14/04, School of Economics and Business Administration, University of Navarra. [Downloadable!]
  3. Mutuswami, Suresh & Perez-Castrillo, David & Wettstein, David, 2004. "Bidding for the surplus: realizing efficient outcomes in economic environments," Games and Economic Behavior, Elsevier, vol. 48(1), pages 111-123, July. [Downloadable!] (restricted)
  4. Jehiel, Philippe & Moldovanu, Benny & Stacchetti, Ennio, 1999. "Multidimensional Mechanism Design for Auctions with Externalities," Journal of Economic Theory, Elsevier, vol. 85(2), pages 258-293, April. [Downloadable!] (restricted)
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