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Large Market Design in Dominance

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  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

Abstract

This paper introduces a new concept of market mechanism design into general economic environments with finite but many traders, where multiple objects are traded and any combination of complements and substitutes is permitted. The auctioneer randomly divides traders into multiple groups. Within each group, trades occur at the market-clearing price vector of another group. With private values, any undominated strategy profile mimics price-taking behavior, enforcing perfect competition. With interdependent values, any twice iteratively undominated strategy profile mimics the rational expectations equilibrium, enforcing ex post efficiency. Our mechanisms are detail-free, i.e., they do not depend on the details of model specification.

Suggested Citation

  • Hitoshi Matsushima, 2005. "Large Market Design in Dominance," CIRJE F-Series CIRJE-F-346, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2005cf346
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2005/2005cf346.pdf
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    References listed on IDEAS

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    1. Benoit, Jean-Pierre, 2002. "Strategic Manipulation in Voting Games When Lotteries and Ties Are Permitted," Journal of Economic Theory, Elsevier, vol. 102(2), pages 421-436, February.
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    6. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    7. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, April.
    8. McAfee, R. Preston, 1992. "A dominant strategy double auction," Journal of Economic Theory, Elsevier, vol. 56(2), pages 434-450, April.
    9. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    10. Rustichini, Aldo & Satterthwaite, Mark A & Williams, Steven R, 1994. "Convergence to Efficiency in a Simple Market with Incomplete Information," Econometrica, Econometric Society, vol. 62(5), pages 1041-1063, September.
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