Bid and Guess: A Nested Mechanism for King Solomon's Dilemma
In this paper we propose a mechanism to resolve King Solomonâ€™s dilemma about allocating an indivisible good at no cost to the participating agents. A distinctive feature of our mechanism is the design of a two-part contest that makes the agents guess each otherâ€™s bids in a second-price auction. The accuracy of an agentâ€™s guess of the other agentâ€™s bid endogenously determines how much she pays for participating in the contest. The truthfully bidding Bayesian-Nash equilibrium of the contesting game results in a reduced game, which has a unique and strict Bayesian-Nash equilibrium that implements the efficient outcome.
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- Olszewski, Wojciech, 2003. "A simple and general solution to King Solomon's problem," Games and Economic Behavior, Elsevier, vol. 42(2), pages 315-318, February.
- Perry, Motty & Reny, Philip J., 1999.
"A General Solution to King Solomon's Dilemma,"
Games and Economic Behavior,
Elsevier, vol. 26(2), pages 279-285, January.
- Perry, M. & Reny, P.J., 1995. "A general solution to king Solomon's dilemma," Discussion Paper 1995-81, Tilburg University, Center for Economic Research.
- Perry, M. & Reny, P.J., 1995. "A General Solution to King Solomon's Dilemma," Papers 9581, Tilburg - Center for Economic Research.
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