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- Title
Optimal combinatorial mechanism design.
- Authors
Ülkü, Levent
- Abstract
We consider an optimal mechanism design problem with several heterogenous objects and interdependent values. We characterize ex post incentives using an appropriate monotonicity condition and reformulate the problem in such a way that the choice of an allocation rule can be separated from the choice of the payment rule. Central to the analysis is the formulation of a regularity condition, which gives a recipe for the optimal mechanism. If the problem is regular, then an optimal mechanism can be obtained by solving a combinatorial allocation problem in which objects are allocated in a way to maximize the sum of virtual valuations. We identify conditions that imply regularity using the techniques of supermodular optimization.
- Subjects
COMBINATORIAL optimization; LABOR incentives; MONOTONIC functions; MATHEMATICAL regularization; PAYMENT; PROBLEM solving
- Publication
Economic Theory, 2013, Vol 53, Issue 2, p473
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-012-0700-8