A characterization of efficient, Bayesian incentive compatible mechanisms

Steven R. Williams

Research output: Contribution to journalArticlepeer-review

Abstract

A mechanism that is both efficient and incentive compatible in the Bayesian-Nash sense is shown to be payoff-equivalent to a Groves mechanism at the point in time when each agent has just acquired his private information. This equivalence result simplifies the question of whether or not an efficient, Bayesian incentive compatible mechanism can satisfy other desired objectives, for the search for an appropriate mechanism can be restricted to the family of Groves mechanisms. The method is used to extend the result of Myerson and Satterthwaite on the inefficiency of bilateral bargaining to a multilateral setting.

Original languageEnglish (US)
Pages (from-to)155-180
Number of pages26
JournalEconomic Theory
Volume14
Issue number1
DOIs
StatePublished - Jul 1999
Externally publishedYes

Keywords

  • Efficiency
  • Groves mechanisms
  • Incentive compatibility
  • Mechanism design

ASJC Scopus subject areas

  • Economics and Econometrics

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