The Myerson-Satterthwaite theorem is a foundational impossibility result in mechanism design which states that no mechanism can be Bayes-Nash incentive compatible, individually rational, and not run a deficit. It holds universally for priors that are continuous, gapless, and overlapping. Using automated mechanism design, we investigate how often the impossibility occurs over discrete valuation ...

We present a simple classroom principal-agent experiment that can effectively be used as a teaching device to introduce important concepts of organizational economics and contracting. In a first part, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. In the second part, students take the role of agents and decide on an effor...

We consider how many bits need to be exchanged to implement a given decision rule when the mechanism must be ex post or Bayesian incentive compatible. For ex post incentive compatibility, the communication protocol must reveal enough information to calculate monetary transfers to the agents to motivate them to be truthful (agents’ payoffs are assumed to be quasilinear in such transfers). For Ba...

This paper describes a formulation of the problem of mechanism design when the participants have private information. Allocations that are efficient within the constraints imposed by incentive compatibility and individual rationality are characterized in terms of necessary conditions. The formulation includes as special cases the design of optimal trading procedures, such as bargaining and auct...

Affordable housing is of much importance for Chinese subsidized housing. However, the implementation of the affordable housing policy is facing several problems. One crucial problem is that the current policy cannot effectively identify high-income applicants who are not qualified to apply for affordable housing. Based on the theory of incentive mechanism design, this paper reveals that the cur...

We study a large economy model in which individuals have private information about their productive abilities and their preferences for public goods. A mechanism design approach is used to characterize implementable tax and expenditure policies. A robustness requirement in the sense of Bergemann and Morris (2005) yields individual incentive compatibility constraints that are equivalent to those...

introduction: this research investigated the factors affecting implementation of activity based costing (abc) in operational budgeting of government agencies in isfahan province. methods: being an applied, cross-sectional and descriptive research, this study made use of a questionnaire for gathering data. governmental agencies that used provincial budget in isfahan province in 1388 comprised th...

We consider the class of Bayesian environments with independent types, and utility functions which are both quasi-linear in a private good and linear in a one-dimensional private-value type parameter. We call these independent linear environments. For these environments, we fully characterize interim efficient allocation rules which satisfy interim incentive compatibility and interim individual...

We consider the problem of converting an arbitrary approximation algorithm for a singleparameter social welfare problem into a computationally efficient incentive compatible mechanism. We ask for reductions that are black-box, meaning that they require only oracle access to the given algorithm and (in particular) do not require explicit knowledge of the problem constraints. We demonstrate that,...

The curse of the Revelation Principle is that it leads us to focus on unrealistic mechanisms in which agents report all private information to the principal, who then makes all decisions centrally. This is not true when communication costs are introduced. Then partial communication of information, sequential back-and-forth conversations, and decentralization of decisions become part of optimal ...