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Essays on Mechanism Design

Erlanson, Albin LU (2014) In Lund Economic Studies 179.
Abstract
This thesis makes a contribution to mechanism design: a field of economic theory concerned with constructing and analyzing economic mechanisms. Examples include design of auctions, voting systems, school choice, kidney exchange and many more. The thesis consists of four separate papers. Paper one and two proposes and analyzes two new iterative auction mechanisms for selling multiple heterogeneous items. Paper three analyzes resource allocation within an organization and characterizes a class of strategy-proof mechanisms. In a strategy-proof mechanism no agent can gain anything by misrepresenting her true preferences. This is a demanding incentive property, but if possible to achieve a desirable property of any real-life mechanism. In the... (More)
This thesis makes a contribution to mechanism design: a field of economic theory concerned with constructing and analyzing economic mechanisms. Examples include design of auctions, voting systems, school choice, kidney exchange and many more. The thesis consists of four separate papers. Paper one and two proposes and analyzes two new iterative auction mechanisms for selling multiple heterogeneous items. Paper three analyzes resource allocation within an organization and characterizes a class of strategy-proof mechanisms. In a strategy-proof mechanism no agent can gain anything by misrepresenting her true preferences. This is a demanding incentive property, but if possible to achieve a desirable property of any real-life mechanism. In the fourth and last paper we revisit the problem of assigning items and money. A strategy-proof mechanism with desirable efficiency and fairness properties is constructed and analyzed. Below follows a short summary of each paper.

The first paper proposes an iterative sealed-bid auction for selling multiple heterogeneous items to bidders interested in buying at most one item. It generalizes the single item bisection auction to the environment with multiple heterogeneous items. We focus on the case with two items for sale. We show that the auction elicits a minimal amount of information on preferences required to find the Vickrey-Clark-Groves outcome, when there are two items for sale and an arbitrary number of bidders.

The second paper also considers a model in which bidders wish to acquire at most one item. We define a polynomial time multi-item auction that locates the VCG prices in a finite number of iterations for any given starting prices. This auction is called the Vickrey-English-Dutch auction and it contains the Vickrey-English auction and the Vickrey-Dutch auction as special cases. By means of numerical experiments, it is showed that when the auctioneer knows the bidders' value distributions, the Vickrey-English-Dutch auction is weakly faster than the Vickrey-English auction and the Vickrey-Dutch auction in 89 percent and 99 percent, respectively, of the investigated problems. A greedy version of the Vickrey-English-Dutch auction is demonstrated to perform even better in the simulation studies.

The third paper examines strategy-proof allocation of multiple divisible and indivisible resources; an application is the assignment of packages of tasks, workloads, and compensations among the members of an organization. We find that any allocation mechanism obtained by maximizing a separably concave function over a polyhedral extension of the set of Pareto-efficient allocations is strategy-proof. Moreover, these are the only strategy-proof and unanimous mechanisms satisfying a coherence property and responding well to changes in the availability of resources.

The fourth paper revisits the problem of allocating copies of an item together with monetary transfers. We propose a strategy-proof, constrainedly-efficient and fair mechanism. In contrast to Groves mechanisms, for which all the surplus is given to the agents who are assigned an object, the new mechanism gives also a share of the surplus to the agents who are not assigned an object. (Less)
Please use this url to cite or link to this publication:
author
supervisor
opponent
  • Professor Herings, Jean-Jacques, Maastricht University
organization
publishing date
type
Thesis
publication status
published
subject
keywords
Multi-item auctions, Strategy-proofness, Package assignment
in
Lund Economic Studies
volume
179
pages
100 pages
defense location
EC3:210
defense date
2014-09-03 13:15
ISSN
0460-0029
language
English
LU publication?
yes
id
8728e7ca-9532-4d69-aca4-daa5b4c6409e (old id 4437365)
date added to LUP
2014-05-13 17:12:34
date last changed
2016-09-19 08:45:01
@misc{8728e7ca-9532-4d69-aca4-daa5b4c6409e,
  abstract     = {This thesis makes a contribution to mechanism design: a field of economic theory concerned with constructing and analyzing economic mechanisms. Examples include design of auctions, voting systems, school choice, kidney exchange and many more. The thesis consists of four separate papers. Paper one and two proposes and analyzes two new iterative auction mechanisms for selling multiple heterogeneous items. Paper three analyzes resource allocation within an organization and characterizes a class of strategy-proof mechanisms. In a strategy-proof mechanism no agent can gain anything by misrepresenting her true preferences. This is a demanding incentive property, but if possible to achieve a desirable property of any real-life mechanism. In the fourth and last paper we revisit the problem of assigning items and money. A strategy-proof mechanism with desirable efficiency and fairness properties is constructed and analyzed. Below follows a short summary of each paper. <br/><br>
The first paper proposes an iterative sealed-bid auction for selling multiple heterogeneous items to bidders interested in buying at most one item. It generalizes the single item bisection auction to the environment with multiple heterogeneous items. We focus on the case with two items for sale. We show that the auction elicits a minimal amount of information on preferences required to find the Vickrey-Clark-Groves outcome, when there are two items for sale and an arbitrary number of bidders.<br/><br>
The second paper also considers a model in which bidders wish to acquire at most one item. We define a polynomial time multi-item auction that locates the VCG prices in a finite number of iterations for any given starting prices. This auction is called the Vickrey-English-Dutch auction and it contains the Vickrey-English auction and the Vickrey-Dutch auction as special cases. By means of numerical experiments, it is showed that when the auctioneer knows the bidders' value distributions, the Vickrey-English-Dutch auction is weakly faster than the Vickrey-English auction and the Vickrey-Dutch auction in 89 percent and 99 percent, respectively, of the investigated problems. A greedy version of the Vickrey-English-Dutch auction is demonstrated to perform even better in the simulation studies.<br/><br>
The third paper examines strategy-proof allocation of multiple divisible and indivisible resources; an application is the assignment of packages of tasks, workloads, and compensations among the members of an organization. We find that any allocation mechanism obtained by maximizing a separably concave function over a polyhedral extension of the set of Pareto-efficient allocations is strategy-proof. Moreover, these are the only strategy-proof and unanimous mechanisms satisfying a coherence property and responding well to changes in the availability of resources. <br/><br>
The fourth paper revisits the problem of allocating copies of an item together with monetary transfers. We propose a strategy-proof, constrainedly-efficient and fair mechanism. In contrast to Groves mechanisms, for which all the surplus is given to the agents who are assigned an object, the new mechanism gives also a share of the surplus to the agents who are not assigned an object.},
  author       = {Erlanson, Albin},
  issn         = {0460-0029},
  keyword      = {Multi-item auctions,Strategy-proofness,Package assignment},
  language     = {eng},
  pages        = {100},
  series       = {Lund Economic Studies},
  title        = {Essays on Mechanism Design},
  volume       = {179},
  year         = {2014},
}