Dynamic mechanism design with interdependent valuations

DOI10.1007/S10058-015-0177-6zbMATH Open1329.91055OpenAlexW756270012MaRDI QIDQ497945FDOQ497945

Authors: Swaprava Nath, Christopher R. Dance, Onno R. Zoeter, Y. Narahari 

Publication date: 25 September 2015

Published in: Review of Economic Design (Search for Journal in Brave)

Abstract: We consider an infinite horizon dynamic mechanism design problem with interdependent valuations. In this setting the type of each agent is assumed to be evolving according to a first order Markov process and is independent of the types of other agents. However, the valuation of an agent can depend on the types of other agents, which makes the problem fall into an interdependent valuation setting. Designing truthful mechanisms in this setting is non-trivial in view of an impossibility result which says that for interdependent valuations, any efficient and ex-post incentive compatible mechanism must be a constant mechanism, even in a static setting. Mezzetti (2004) circumvents this problem by splitting the decisions of allocation and payment into two stages. However, Mezzetti's result is limited to a static setting and moreover in the second stage of that mechanism, agents are weakly indifferent about reporting their valuations truthfully. This paper provides a first attempt at designing a dynamic mechanism which is efficient, `strict' ex-post incentive compatible and ex-post individually rational in a setting with interdependent values and Markovian type evolution.

Full work available at URL: https://arxiv.org/abs/1506.07631

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zbMATH Keywords

Nash equilibriumcollective actiondynamic gamessocial choicedynamic mechanism designMarkov decision problemdynamic pivot mechanisminterdependent value

Mathematics Subject Classification ID

Applications of game theory (91A80) Auctions, bargaining, bidding and selling, and other market models (91B26) Markov and semi-Markov decision processes (90C40)

Cites Work

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• Incentives in Teams
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• Efficient dynamic mechanisms with interdependent valuations
• Mechanism design with multidimensional, continuous types and interdependent valuations
• Worst-case efficient and budget-balanced mechanism for single-object allocation with interdependent values
• Efficient dynamic mechanisms in environments with interdependent valuations: the role of contingent transfers

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