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Iterative Revelation Mechanisms

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  • Ryuji Sano

    (Institute of Economic Research, Kyoto University)

Abstract

This paper considers dynamic resource allocation processes, called iterative revelation mechanisms, with quasi-linear dichotomous utilities and complete information. Agents gradually reveal their valuation through binary questions. The social planner identifies the efficient outcome, and monetary transfer is determined on a “pay-as-bid†basis. We show that the efficient allocation rule is implemented in a subgame perfect Nash equilibrium, regardless of details of a binary-question process. The analysis applies to the case with limited communication, and every strongly monotone allocation rule is implemented in equilibrium. We also show that if a resource allocation process is ex post incentive compatible, it is an ascending-price mechanism. In a single-object allocation problem, the English auction is a unique mechanism satisfying efficiency, ex post incentive compatibility, and pay-as-bid transfer.

Suggested Citation

  • Ryuji Sano, 2016. "Iterative Revelation Mechanisms," KIER Working Papers 937, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:937
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP937.pdf
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    iterative revelation mechanism; limited communication; ascending price; English auction;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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