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Surplus Sharing with a Two‐Stage Mechanism[Note 1. We thank two anonymous referees for their insightful comments ...]
Author(s) -
Kaplan Todd R.,
Wettstein David
Publication year - 2000
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.00068
Subject(s) - mechanism (biology) , construct (python library) , outcome (game theory) , microeconomics , class (philosophy) , computer science , mechanism design , economics , artificial intelligence , philosophy , epistemology , programming language
In this article we consider environments where agents jointly produce a private output good by contributing privately owned resources. An efficient outcome may not be realized due to strategic behavior and conflicting interests of the agents. We construct a two‐stage mechanism, building on a Varian mechanism. The modified mechanism ensures an equilibrium for a large class of preferences and guarantees the feasibility of outcomes.