This paper characterizes interim efficient mechanisms for public good production and cost allocation in a two-type environment with risk neutral, quasi-linear preferences and fixed size projects, where the distribution of the private good, as well as the public goods decision, affects social welfare. An efficient public good decision can always be accomplished by a majority voting scheme, where the number of “YES ” votes required depends on the welfare weights in a simple way. The results are shown to have a natural geometry and an intuitive interpretation. We also extend these results to allow for restrictions on feasible transfer rules, ranging from the traditional unlimited transfers to the extreme case of no transfers. For a range of welfare weights, an optimal scheme is a two-stage procedure which combines a voting stage with a second stage where an even-chance lottery is used to determine who pays. We call this the “lottery draft mechanism”. Since such a cost-sharing scheme does not require transfers, it follows that in many cases transfers are not necessary to achieve the optimal allocation. For other ranges of welfare weights the second stage is more complicated, but the voting stage remains the same. If transfers are completely infeasible, randomized voting rules may be optimal. The paper also provides a geometric characterization of the effects of voluntary participation constraints.

Most existing methods for scheduling are based on centralized or hierarchical decision making using monolithic models. In this study, we investigate a new generation of scheduling methods based on a distributed and locally autonomous decision structure. Specifically, we propose a decision structure based on auction theory. The basic idea is to localize and distribute the functionality of scheduling, leaving the complexity of operational decisions to local decision makers, while maintaining a simple and generic central coordination mechanism. The proposed structure allows local decision makers to make their decisions dynamically and independently according to changes in their local environments. A central coordination mechanism then makes resource allocation based on an iterative auction process using information obtained from local decision makers. We propose following research endeavors: ffl We will study the decomposition of monolithic optimization models which provides the basis for...

Abstract. We prove—in the standard independent private-values model—that the outcome, in terms of expected probabilities of trade and expected transfers, of any Bayesian mechanism, can also be obtained with a dominant-strategy mechanism. Key words: Independent private values, incentive compatibility, Bayesian implementations, dominant-strategy implementation, adverse selection, bilateral trade, mechanism design. 1.

We give necessary and sufficient conditions for the existence of symmetric equilibrium without ties in common values auctions, with multidimensional independent types and no monotonic assumptions. When the conditions are not satisfied, we are still able to prove the existence of pure strategy equilibrium with an exogenous and explicit tie breaking mechanism. As a basis for these results, we obtain a characterization lemma that is valid under a general setting, that includes non-independent types, asymmetrical utilities and any attitude towards risk. Such characterization gives a basis for an intuitive interpretation for the behavior of the bidder: to bid in order to equalize the marginal benefit and the marginal cost of bidding.

We study an abstract optimal auction problem for a single good or service. This problem includes environments where agents have budgets, risk preferences, or multi-dimensional preferences over several possible configurations of the good (furthermore, it allows an agent’s budget and risk preference to be known only privately to the agent). These are the main challenge areas for auction theory. A single-agent problem is to optimize a given objective subject to a constraint on the maximum probability with which each type is allocated, a.k.a., an allocation rule. Our approach is a reduction from multi-agent mechanism design problem to collection of single-agent problems. We focus on maximizing revenue, but our results can be applied to other objectives (e.g., welfare). An optimal multi-agent mechanism can be computed by a linear/convex program on interim allocation rules by simultaneously optimizing several single-agent mechanisms subject to joint feasibility of the allocation rules. For single-unit auctions, Border (1991) showed that the space of all jointly feasible interim allocation rules for n agents is a D-dimensional convex polytope which can be specified by 2D linear constraints, where D is the total number of all agents’