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Characterization of Revenue Equivalence
Author(s) -
Heydenreich Birgit,
Müller Rudolf,
Uetz Marc,
Vohra Rakesh V.
Publication year - 2009
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta7168
Subject(s) - equivalence (formal languages) , incentive compatibility , revenue , mathematical economics , characterization (materials science) , payment , compatibility (geochemistry) , mathematics , economics , incentive , computer science , microeconomics , discrete mathematics , finance , engineering , physics , chemical engineering , optics
The property of an allocation rule to be implementable in dominant strategies by a unique payment scheme is called revenue equivalence . We give a characterization of revenue equivalence based on a graph theoretic interpretation of the incentive compatibility constraints. The characterization holds for any (possibly infinite) outcome space and many of the known results are immediate consequences. Moreover, revenue equivalence can be identified in cases where existing theorems are silent.