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Efficient dynamic mechanisms in environments with interdependent valuations: the role of contingent transfers

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  • Liu, Heng

    (Department of Economics, University of Michigan)

Abstract

This paper addresses the problem of implementing socially efficient allocations in dynamic environments with interdependent valuations and evolving private information. In the case where the agents' information is correlated across time, we construct efficient and incentive compatible direct dynamic mechanisms. Unlike the mechanisms with history-independent transfers in the existing literature, these mechanisms feature history-dependent transfers. Moreover, they are reminiscent of the classical VCG mechanism, even though the latter is not incentive compatible with interdependent valuations. We further show that the VCG aspect of the direct mechanisms suggests natural ways for implementation in some repeated auctions.

Suggested Citation

  • Liu, Heng, 2018. "Efficient dynamic mechanisms in environments with interdependent valuations: the role of contingent transfers," Theoretical Economics, Econometric Society, vol. 13(2), May.
    • Handle: RePEc:the:publsh:2234
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    More about this item

    Keywords

    Dynamic mechanism; interdependent valuation; intertemporal correlation;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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