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Smooth Multibidding Mechanisms

Author

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  • David Pérez-Castrillo
  • Nicolas Quérou

Abstract

We propose a smooth multibidding mechanism for environments where a group of agents have to choose one out of several projects (possibly with the help of a social planner). Our proposal is related to the multibidding mechanism (Pérez-Castrillo and Wettstein, 2002) but it is "smoother" in the sense that small variations in an agent's bids do not lead to dramatic changes in the probability of selecting a project. This mechanism is shown to possess several interesting properties. Unlike in the study by Pérez Castrillo and Wettstein (2002), the equilibrium outcome is unique. Second, it ensures an equal sharing of the surplus that it induces. Finally, it enables reaching an outcome as close to efficiency as is desired.

Suggested Citation

  • David Pérez-Castrillo & Nicolas Quérou, 2010. "Smooth Multibidding Mechanisms," Working Papers 520, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:520
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Mechanism Design; NIMBY;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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