Mechanism design with side payments: Individual rationality and iterative dominance

• 成果类型: Article
• 署名作者: Matsushima, Hitoshi
• 署名单位: University of Tokyo
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2005.10.005
• 发表日期: 2007
• 页码: 1-30
• 关键词: Incentive compatibility; budget balancing; interim individual rationality; iterative dominance; full surplus extraction; auctions with a risk-averse principal

摘要

We investigate the collective decision with incomplete information and side payments. We show that a direct mechanism associated with the social choice function that satisfies budget balancing, incentive compatibility, and interim individual rationality exists for generic prior distributions. We consider the possibility that a risk-averse principal extracts full surplus in agency problems with adverse selection. With regard to generic prior distributions, we show that there exists a modified direct mechanism associated with the virtual social choice function, which satisfies budget balancing and interim individual rationality, such that truth telling is the unique three times iteratively undominated message rule profile. (c) 2005 Elsevier Inc. All rights reserved.