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Collusive dominant-strategy truthfulness

  • Chen, Jing
  • Micali, Silvio
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    We show that collusion and wrong beliefs may cause a dramatic efficiency loss in the Vickrey mechanism for auctioning a single good in limited supply. We thus put forward a new mechanism guaranteeing efficiency in a very adversarial collusion model, where the players can partition themselves into arbitrarily many coalitions, exchange money with each other, and perfectly coordinate their actions. Our mechanism bypasses classic impossibility results (such as those of Green and Laffont, and of Schummer) by providing the players with a richer set of strategies, making it dominant for every coalition C to instruct each of its members to report truthfully not only his own valuation, but also his belonging to C. Our mechanism is coalitionally rational, which implies being individually rational for independent players.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0022053112000221
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    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 147 (2012)
    Issue (Month): 3 ()
    Pages: 1300-1312

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    Handle: RePEc:eee:jetheo:v:147:y:2012:i:3:p:1300-1312
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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    1. James Schummer, 1997. "Manipulation Through Bribes," Discussion Papers 1207, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Yeon-Koo Che & Jinwoo Kim, 2005. "Robustly collusion-proof implementation," Discussion Papers 0506-12, Columbia University, Department of Economics.
    3. Barbera, Salvador & Jackson, Matthew O, 1995. "Strategy-Proof Exchange," Econometrica, Econometric Society, vol. 63(1), pages 51-87, January.
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    5. Jean-Jacques Laffont & David Martimort, 2000. "Mechanism Design with Collusion and Correlation," Econometrica, Econometric Society, vol. 68(2), pages 309-342, March.
    6. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    7. Matthew O. Jackson, 1990. "Undominated Nash Implementation in Bounded Mechanisms," Discussion Papers 966, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. Hideki Mizukami, 2003. "On the constancy of bribe-proof solutions," Economic Theory, Springer, vol. 22(1), pages 211-217, 08.
    9. Hervé Moulin & Scott Shenker, 2001. "Strategyproof sharing of submodular costs:budget balance versus efficiency," Economic Theory, Springer, vol. 18(3), pages 511-533.
    10. Suh, Sang-Chul, 1996. "Implementation with coalition formation: A complete characterization," Journal of Mathematical Economics, Elsevier, vol. 26(4), pages 409-428.
    11. Abreu, Dilip & Matsushima, Hitoshi, 1992. "A Response [Virtual Implementation in Iteratively Undominated Strategies I: Complete Information]," Econometrica, Econometric Society, vol. 60(6), pages 1439-42, November.
    12. Moulin, Hervé & Peleg, B., 1982. "Cores of effectivity functions and implementation theory," Economics Papers from University Paris Dauphine 123456789/13220, Paris Dauphine University.
    13. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
    14. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
    15. HervÊ Moulin, 1999. "Incremental cost sharing: Characterization by coalition strategy-proofness," Social Choice and Welfare, Springer, vol. 16(2), pages 279-320.
    16. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
    17. Glazer, Jacob & Perry, Motty, 1996. "Virtual Implementation in Backwards Induction," Games and Economic Behavior, Elsevier, vol. 15(1), pages 27-32, July.
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