Efficient dynamic mechanisms with interdependent valuations

• Main Authors: HE, Wei, LI, Jiangtao
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Dynamic mechanism design; Efficiency; Observable payoff; Incentive compatibility; Budget balance; Economic Theory
• Online Access: https://ink.library.smu.edu.sg/soe_research/2198; https://ink.library.smu.edu.sg/context/soe_research/article/3197/viewcontent/1_s20_S0899825616300239_main.pdf
• Institution: Singapore Management University

This paper considers a dynamic environment with interdependent valuations and evolving private information. Under the assumption of “independent types”, we construct an efficient, incentive-compatible mechanism that is also budget-balanced in every period of the game. Our mechanism works in environments where in each period, each agent observes her own realized outcome-decision payoff from the previous period. This extends the insight of Mezzetti (2004) to the dynamic setting.