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Coalition-proof full efficient implementation

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  • Safronov, Mikhail

Abstract

The Vickrey–Clarke–Groves and d'Aspremont–Gerard-Varet mechanisms implement efficient social choice by compensating each agent for the externalities that his report imposes on all other agents. Instead of aggregate compensations, which may lead to profitable coalitional deviations, this paper provides an alternative mechanism, in which each pair of agents directly compensate each other for the pairwise externalities they impose. Under the assumption of independent private values, any agent is guaranteed to receive his ex ante efficient payoff by reporting truthfully, regardless of others' strategies. This absence of ex ante externalities makes the mechanism coalition-proof, and makes all equilibria efficient.

Suggested Citation

  • Safronov, Mikhail, 2018. "Coalition-proof full efficient implementation," Journal of Economic Theory, Elsevier, vol. 177(C), pages 659-677.
  • Handle: RePEc:eee:jetheo:v:177:y:2018:i:c:p:659-677
    DOI: 10.1016/j.jet.2018.07.009
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    References listed on IDEAS

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    More about this item

    Keywords

    Mechanism design; Internalizing externalities; Coalition-proofness; Full implementation;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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