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King Solomon’s dilemma: an experiment on implementation in iterative elimination of (obviously) dominated strategies

Author

Listed:
  • Makoto Hagiwara

    (Osaka University of Economics)

  • Fumihiro Yonekura

    (Tokyo Institute of Technology)

Abstract

“King Solomon’s dilemma” is based on a biblical story that can be considered an allocation problem for an indivisible good among two players. We experimentally compare the performance of the mechanism of Mihara (Jpn Econ Rev 63(3):420–429, 2012) with a modified version of his mechanism that we propose. Mihara’s mechanism uses a second-price auction, while we change it to an ascending clock auction. We find that the modified version performs relatively better than Mihara’s in terms of the right-player allocations, “resource inefficiency,” “wrong-player inefficiency,” and the equilibrium strategies of high valuation players. Regarding the first-best allocations and equilibrium strategies of low valuation players, in our experiment, there was a trend for improvement under the modified version relative to Mihara’s mechanism.

Suggested Citation

  • Makoto Hagiwara & Fumihiro Yonekura, 2024. "King Solomon’s dilemma: an experiment on implementation in iterative elimination of (obviously) dominated strategies," Review of Economic Design, Springer;Society for Economic Design, vol. 28(1), pages 1-19, February.
    • Handle: RePEc:spr:reecde:v:28:y:2024:i:1:d:10.1007_s10058-023-00328-8
    DOI: 10.1007/s10058-023-00328-8
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    Keywords

    King Solomon’s dilemma; Mihara’s mechanism; Ascending clock auctions; Laboratory experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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