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Price and Choose

Author

Listed:
  • Echenique, Federico
  • Núñez, Matías

Abstract

We describe a sequential mechanism that fully implements the set of efficient outcomes in environments with quasi-linear utilities. The mechanism asks agents to take turns in defining prices for each outcome, with a final player choosing an outcome for all: Price and Choose. The choice triggers a sequence of payments from each agent to the preceding agent. We present several extensions. First, payoff inequalities may be reduced by endogenizing the order of play. Second, our results extend to a model without quasi-linear utility, to a setting with an outside option, robustness to max-min behavior, and caps on prices. (JEL C72, D11, D44, D71, D82)

Suggested Citation

  • Echenique, Federico & Núñez, Matías, 2025. "Price and Choose," Department of Economics, Working Paper Series qt5dw4g7k5, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt5dw4g7k5
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    More about this item

    Keywords

    Economics; Applied Economics; Economic Theory; Banking; finance and investment; Applied economics; Economic theory;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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