Full Surplus Extraction and within-Period Ex Post Implementation in Dynamic Environments

38 Pages Posted: 23 Jan 2014 Last revised: 1 Aug 2016

Shunya Noda

Stanford University, Department of Economics, Students

Date Written: August 1, 2016

Abstract

We study the properties of the information structure that guarantee full surplus extraction and implementation of allocation rules in dynamic environments. Exploiting the intertemporal correlation of agents' types, we propose a condition for the existence of a within-period ex post incentive compatible mechanism that leaves no information rent. The concepts of strong- and weak-detectability suggested in this paper turn out to be crucial for achieving this goal. Our results suggest that the assumptions needed for private information to confer a positive rent might be stronger when we consider dynamic environments.

The online appendix may be found at http://ssrn.com/abstract=2777806.

Keywords: Dynamic mechanism design, perfect Bayesian equilibrium, revenue maximization, full surplus extraction

JEL Classification: C73, D47, D42, D44, D82

Suggested Citation

Noda, Shunya, Full Surplus Extraction and within-Period Ex Post Implementation in Dynamic Environments (August 1, 2016). Available at SSRN: https://ssrn.com/abstract=2382416 or http://dx.doi.org/10.2139/ssrn.2382416

Shunya Noda (Contact Author)

Stanford University, Department of Economics, Students ( email )

Stanford, CA
United States

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