Reduced Form Implementation for Environments With Value Interdependencies

Abstract

We provide a unified and simple treatment of reduced-form implementation for general social choice problems and extend it to environments with value interdependencies. We employ the geometric approach developed by Goeree and Kushnir (2016) to characterize the set of feasible interim agent values (agent utilities excluding transfers) by deriving the analytical expression of its support function. As an application, we use the reduced-form implementation to analyze second-best mechanisms in environments with value interdependencies.

Keywords: Mechanism design, Convex analysis, Reduced-form implementation, Social choice, Interdependent values, Convex set, Support function

JEL Classification: D44 D82