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Mechanism design to the budget constrained buyer: a canonical mechanism approach

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  • Naoki Kojima

Abstract

The present paper studies the problem on multi-dimensional mechanisms in which the buyer’s taste and budget are his private information. The paper investigates the problem by way of a canonical mechanism in the traditional one-dimensional setting: function of one variable, the buyer’s taste. In our multi-dimensional context, this is an indirect mechanism. The paper characterizes the optimal canonical mechanism and shows that this approach loses no generality with respect to the direct (multi-dimensional) mechanism. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Naoki Kojima, 2014. "Mechanism design to the budget constrained buyer: a canonical mechanism approach," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(3), pages 693-719, August.
    • Handle: RePEc:spr:jogath:v:43:y:2014:i:3:p:693-719
    DOI: 10.1007/s00182-013-0403-9
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    References listed on IDEAS

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    Cited by:

    1. Kotowski, Maciej H., 2020. "First-price auctions with budget constraints," Theoretical Economics, Econometric Society, vol. 15(1), January.

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    More about this item

    Keywords

    Multi-dimensional mechanism; Indirect mechanism; Budget constraint; Revelation principle; Taxation principle; D82; D86;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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