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King Solomon's Dilemma: A Laboratory Study on Implementation

Author

Listed:
  • John H. Kagel
  • A. Alexander Elbittar

Abstract

This paper reports an experiment involving two mechanisms that allocate a single unit of an indivisible private good among two players, at no cost to either of them. Both mechanisms, proposed by Moore (1992) and Perry and Reny (1999), are compared in terms of their relative performance to assign the good to the agent with the highest valuation, and without monetary transfer. Both mechanisms have similar performances allocating the object to the agent with the highest valuation. Perry-Reny's mechanism performs better in an incomplete information environment than in a complete information environment. Moore's mechanism showed a better performance in a complete information environment. A modified version of the Perry-Reny's mechanism was also considered, showing a better performance in terms of efficiency and in terms of predictions. Some hypotheses about different sources of variability affecting the relative performance of each mechanism are also tested

Suggested Citation

  • John H. Kagel & A. Alexander Elbittar, 2004. "King Solomon's Dilemma: A Laboratory Study on Implementation," Econometric Society 2004 North American Winter Meetings 592, Econometric Society.
  • Handle: RePEc:ecm:nawm04:592
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    Citations

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    Cited by:

    1. Giovanni Ponti, 2000. "Splitting The Baby In Two: How To Solve Solomon'S Dilemma When Agents Are Boundedly Rational," Working Papers. Serie AD 2000-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Cabrales, Antonio & Charness, Gary & Corchon, Luis C., 2003. "An experiment on Nash implementation," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 161-193, June.
    3. Giovanni Ponti & Anita Gantner & Dunia López-Pintado & Robert Montgomery, 2003. "Solomon's Dilemma: An experimental study on dynamic implementation," Review of Economic Design, Springer;Society for Economic Design, vol. 8(2), pages 217-239, October.

    More about this item

    Keywords

    Implementation theory; mechanism design; and laboratory experiments.;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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