Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150268
Authors: 
Postlewaite, Andrew
McLean, Richard
Year of Publication: 
2015
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 10 [Year:] 2015 [Issue:] 3 [Pages:] 923-952
Abstract: 
It is well-known that the ability of the Vickrey-Clarke-Groves (VCG) mechanism to implement efficient outcomes for private value choice problems does not extend to interdependent value problems. When an agent's type affects other agents' utilities, it may not be incentive compatible for him to truthfully reveal his type when faced with VCG payments. We show that when agents are informationally small, there exist small modifications to the VCG transfers that restore incentive compatibility. We further show that truthful revelation is an approximate ex post equilibrium. Lastly, we show that in replicated settings aggregate payments sufficient to induce truthful revelation go to zero.
Subjects: 
Auctions
incentive compatibility
mechanism design
interdependent values
ex post incentive compatibility
JEL: 
C70
D44
D60
D82
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Article

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