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A General Characterization of Interim Efficient Mechanisms for Independent Linear Environments

Ledyard, John O. and Palfrey, Thomas R. (2003) A General Characterization of Interim Efficient Mechanisms for Independent Linear Environments. Social Science Working Paper, 1186. California Institute of Technology , Pasadena, CA. (Unpublished)

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We consider the class of Bayesian environments with independent types, and utility functions which are both quasi-linear in a private good and linear in a one-dimensional private-value type parameter. We call these independent linear environments. For these environments, we fully characterize interim efficient allocation rules which satisfy interim incentive compatibility and interim individual rationality constraints. We also prove that they correspond to decision rules based on virtual surplus maximization, together with the appropriate incentive taxes. We demonstrate how these techniques can be applied easily to the design of auctions, markets, bargaining rules, public good provision, and assignment problems.

Item Type:Report or Paper (Working Paper)
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Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:The financial support of the National Science Foundation is gratefully acknowledged, grant SES-0079301. This is a revised version of a lecture presented at the CORE Conference in Memory of Louis-André Gérard-Varet, January, 2003. Earlier versions were presented at Northwestern University and the 1999 Midwest Mathematical Economics meeting at University of Illinois. We are grateful to seminar participants for comments. Published as Ledyard, J.O., & Palfrey, T.R. (2007). A general characterization of interim efficient mechanisms for independent linear environments. Journal of Economic Theory, 133(1), 441-466.
Group:Social Science Working Papers
Funding AgencyGrant Number
Subject Keywords:public goods, mechanism design, interim efficiency, incentive compatibility, private values
Series Name:Social Science Working Paper
Issue or Number:1186
Classification Code:JEL: 024, 026
Record Number:CaltechAUTHORS:20170731-152920042
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79629
Deposited By: Jacquelyn Bussone
Deposited On:01 Aug 2017 22:59
Last Modified:22 Nov 2019 09:58

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