Bargaining Mechanisms for One-Way Games

We introduce one-way games, a framework motivated by applications in large-scale power restoration, humanitarian logistics, and integrated supply-chains. The distinguishable feature of the games is that the payoff of some player is determined only by her own strategy and does not depend on actions taken by other players. We show that the equilibrium outcome in one-way games without payments and the social cost of any ex-post efficient mechanism, can be far from the optimum. We also show that it is impossible to design a Bayes-Nash incentive-compatible mechanism for one-way games that is budget-balanced, individually rational, and efficient. To address this negative result, we propose a privacy-preserving mechanism that is incentive-compatible and budget-balanced, satisfies ex-post individual rationality conditions, and produces an outcome which is more efficient than the equilibrium without payments. The mechanism is based on a single-offer bargaining and we show that a randomized multi-offer extension brings no additional benefit.Comment: An earlier, shorter version of this paper appeared in Proceedings of the Twenty-Fourth International joint conference on Artificial Intelligence (IJCAI) 201

A Bayesian Incentive Compatible Mechanism for Fair Division

We consider the problem of fairly allocating one indivisible object when monetary transfers are possible, and examine the existence of Bayesian incentive compatible mechanisms to solve the problem. We propose a mechanism that satisfies envy-freeness, budget balancedness, and Bayesian incentive compatibility. Further, we establish the uniqueness of the mechanism under an order additivity condition. This result contrasts well with various results on the incompatibility between efficiency and ex post incentive compatibility.

Interregional Redistribution and Budget Institutions under Asymmetric Information

Empirical evidence from the U.S. and the European Union suggests that regions which contribute to interregional redistribution face weaker borrowing constraints than regions which benefit from interregional redistribution. This paper presents an argument in favor of such differentiated budgetary institutions. It develops a two-period model of a federation consisting of two types of regions. The federal government redistributes from one type of regions (contributors) to the other type (recipients). It is shown that a fiscal constitution with lax budget rules for contributors and strict budget rules for recipients solves the self-selection problem the federal government faces in the presence of asymmetric information regarding exogenous characteristics of the regions.asymmetric information, interregional redistribution, borrowing rules

Robust Mechanism Design

The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces. We ask when ex post implementation is equivalent to interim (or Bayesian) implementation for all possible type spaces. The equivalence holds in the case of separable environments; examples of separable environments arise (1) when the planner is implementing a social choice function (not correspondence); and (2) in a quasilinear environment with no restrictions on transfers. The equivalence fails in general, including in some quasilinear environments with budget balance. In private value environments, ex post implementation is equivalent to dominant strategies implementation. The private value versions of our results offer new insights into the relation between dominant strategy implementation and Bayesian implementation.Mechanism design, Common knowledge, Universal type space, Interim equilibrium, Ex-post equilibrium, Dominant strategies