Incentive Compatible Market Design with Applications

33 Pages Posted: 5 Oct 2010 Last revised: 14 Jun 2012

Date Written: August 30, 2010

Abstract

This paper studies markets for heterogeneous goods using mechanism-design theory. For each combination of desirable properties, I derive an assignment process with these properties in the form of a corresponding direct-revelation game, or I show that it does not exist. Each participant's utility is quasi-linear in money, and depend upon the allocation that he gets - thus, a participant's privately known 'type' is multidimensional. The key properties are incentive compatibility, individual rationality, efficiency, and budget balance. The main results characterize mechanisms that are ex post incentive compatible in combination with other properties.

Keywords: Auctions, Ex Post Incentive Compatibility, Incomplete Information, Matching, Multidimensional Types

JEL Classification: C71, C78, D82, D44

Suggested Citation

Yenmez, M. Bumin, Incentive Compatible Market Design with Applications (August 30, 2010). Available at SSRN: https://ssrn.com/abstract=1687144 or http://dx.doi.org/10.2139/ssrn.1687144

M. Bumin Yenmez (Contact Author)

Boston College ( email )

140 Commonwealth Ave.
Maloney Hall 327
Chestnut Hill, MA 02467
United States

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