Open AccessEfficient dynamic mechanisms in environments with interdependent valuations: The role of contingent transfers
Author(s) -
Liu Heng
Publication year - 2018
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te2234
Subject(s) - interdependence , common value auction , incentive compatibility , mechanism design , vickrey–clarke–groves auction , incentive , construct (python library) , computer science , microeconomics , private information retrieval , mechanism (biology) , mathematical economics , economics , auction theory , computer security , political science , law , programming language , philosophy , epistemology
This paper addresses the problem of implementing socially efficient allocations in dynamic environments with interdependent valuations and evolving private information. In the case where the agents' information is correlated across time, we construct efficient and incentive compatible direct dynamic mechanisms. Unlike the mechanisms with history‐independent transfers in the existing literature, these mechanisms feature history‐dependent transfers. Moreover, they are reminiscent of the classical Vickrey–Clarke–Grove (VCG) mechanism, even though the latter is not incentive compatible with interdependent valuations. We further show that the VCG aspect of the direct mechanisms suggests natural ways for implementation in some repeated auctions.