Dominant strategy implementation of Bayesian incentive compatible allocation rules

Robust implementation under alternative information structures

“…2 Our result contrasts with that obtained by Ledyard (1978) about the impossibility of implementing with Bayesian Equilibrium for every prior a large class of SCC, and with the so-calIed 'incentive compatibility approach to organization design' in which the choice of the mechanism depends crucialIy on prior beliefs (see Ledyard (1987) p. 149 and also Mookherjee-Reichelstein (1989), p. 1). In this approach first best alternatives can not usualIy be achieved (see HarrisTownsend (1981) pp.…”

Mixed bundling auctions

“…Valuations are independently distributed across bidders, and take two values 19 : v with probability p and v with probability 1 − p , where v > v. The only parameter in a symmetric single-object λ-auction is the reserve price: setting a low reserve price yields expected revenue of p 2 v + (1 − p 2 )v , while setting a high reserve price yields p(2 − p)v. We now construct an asymmetric λ-auction that outperforms both of these, and thus all, symmetric λ-auctions.…”

Optimal collusion with internal contracting

“…11 The use of dominant-strategy implementation is due to Mookherjee and Reichelstein (1992 = 0 otherwise. In this paper, we say that productive efficiency is achieved if these three conditions hold.…”

“…Let V s denote the set of SPPE continuation values. The values in V s are restricted to the 45-degree line, and the Pareto-frontier value set of SPPE is reduced to a point ( 32 In SPPE, any continuationvalue reduction (below the Pareto-frontier value set) is suffered by all firms together. In APPE, by contrast, a continuation-value loss for one firm may imply a continuation-value gain for another.…”

“…The constraint shows that (i) if a vector (p, q, v) achieves price efficiency (p jk = ρ) and Pareto-efficient continuation values (v i jk = b u), then it entails productive inefficiency (q i L = q i H ), and (ii) if the vector achieves productive efficiency and Pareto-efficient continuation 32 The value u is the supremum of SPPE continuation values. We show below that the Pareto-frontier set of SPPE values includes this supremum.…”