First Best Bayesian Privatization Mechanisms
- Creators
- Dudek, R.
- Kim, Taesung
- Ledyard, John O.
Abstract
A planner is interested in designing an ex-post efficient, individually rational, Bayesian mechanism for allocating a single indivisible object to one of the agents who knows his own valuation and only the distribution of other agents' valuations of the object. In this paper, we show that it is impossible to design such a mechanism without any transfers among agents and the planner. However, we discover and describe an ex-post efficient, ex-post individually rational, Bayesian mechanism which balances transfers among agents without any payment to (or from) the planner. Our result that an ex-post efficient, ex-post individually rational, transfer balanced, Bayesian mechanism exists, is in stark contrast to two well-known impossibility results in the literature; the nonexistence of a Bayesian public good mechanism satisfying expost efficiency, individual rationality and budget balance (Laffont and Maskin (1979)) and the impossibility of an ex-post efficient, individually rational, Bayesian bilateral trading mechanism between a seller and a buyer without an outside subsidy (Myerson and Satterthwaite (1983)).
Additional Information
Revised version. Original dated to August 1994. We are grateful to Kim Border, Leo Hurwicz, Mathew Jackson, Herve Moulin and Tom Palfrey for their comments on an early version. We have also benefited greatly from the many valuable suggestions of two anonymous referees.Attached Files
Submitted - sswp896_-_revised.pdf
Files
Name | Size | Download all |
---|---|---|
md5:aa796ce33d7af48c2d11607dea3ddd5b
|
758.0 kB | Preview Download |
Additional details
- Eprint ID
- 80684
- Resolver ID
- CaltechAUTHORS:20170822-135920548
- Created
-
2017-08-23Created from EPrint's datestamp field
- Updated
-
2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 986