Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2010

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Ex-Post Individually Rational, Budget-Balanced Mechanisms

Sergei Severinov*, Joon Song

Date: 2010-05-23 10:15 am – 10:45 pm
Last modified: 2010-05-17

Abstract


We investigate the issue of implementation via ex-post individually rational budget-balanced Bayesian mechanisms and allocation of surplus. We set up an auxiliary problem for minimized information rent where an agent is committed to a certain mixed deviation strategy before the agent's own type is known to himself. This formulation allows us to provide necessary and sufficient implementability conditions. We also develop an algorithm to
determine whether a decision rule is implementable or not and to compute the informational rents earned by the players.
 We provide full characterization of the optimal mechanisms and implementability conditions in a number of special, but common cases.

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