Monotonicity, Revenue Equivalence and Budgets
Abstract
We study multidimensional mechanism design in a common scenario where players have private information about their willingness to pay and their ability to pay. We provide a complete characterization of dominant-strategy incentive-compatible direct mechanisms where over-reporting the budget is not possible. In several settings, reporting larger budgets can be made suboptimal with a small randomized modification to the payments. We then derive a closely related partial characterization for the general case where players can arbitrarily misreport their private budgets. Immediate applications of these results include simple characterizations for mechanisms with publicly-known budgets and for mechanisms without monetary transfers. The celebrated revenue equivalence theorem states that the seller"s revenue for a broad class of standard auction formats and settings will be the same in equilibrium. Our main application is a revenue equivalence theorem for financially constrained bidders.
Cite
@article{arxiv.1404.7784,
title = {Monotonicity, Revenue Equivalence and Budgets},
author = {Ahuva Mualem},
journal= {arXiv preprint arXiv:1404.7784},
year = {2014}
}