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Games 2013, 4(4), 690-710; doi:10.3390/g4040690
Article

The Incompatibility of Pareto Optimality and Dominant-Strategy Incentive Compatibility in Sufficiently-Anonymous Budget-Constrained Quasilinear Settings

1,*  and 2
1 Department of Management and Economics, The Open University of Israel, 1 University Road, Raanana 43537, Israel 2 Department of Mathematics and Computer Science, The Open University of Israel, 1 University Road, Raanana 43537, Israel
* Author to whom correspondence should be addressed.
Received: 19 June 2013 / Revised: 2 November 2013 / Accepted: 7 November 2013 / Published: 18 November 2013
Download PDF [399 KB, 19 November 2013; original version 18 November 2013]

Abstract

We analyze the space of deterministic, dominant-strategy incentive compatible, individually rational and Pareto optimal combinatorial auctions. We examine a model with multidimensional types, nonidentical items, private values and quasilinear preferences for the players with one relaxation; the players are subject to publicly-known budget constraints. We show that the space includes dictatorial mechanisms and that if dictatorial mechanisms are ruled out by a natural anonymity property, then an impossibility of design is revealed. The same impossibility naturally extends to other abstract mechanisms with an arbitrary outcome set if one maintains the original assumptions of players with quasilinear utilities, public budgets and nonnegative prices.
Keywords: budget constraints; Pareto efficiency; incentive compatibility budget constraints; Pareto efficiency; incentive compatibility
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Gonen, R.; Lerner, A. The Incompatibility of Pareto Optimality and Dominant-Strategy Incentive Compatibility in Sufficiently-Anonymous Budget-Constrained Quasilinear Settings. Games 2013, 4, 690-710.

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