Publications
Publications
- 2015
Strategy-Proofness, Investment Efficiency, and Marginal Returns: An Equivalence
By: John William Hatfield, Fuhito Kojima and Scott Duke Kominers
Abstract
We show that a mechanism induces an agent to make efficient ex ante investment choices if and only if it rewards that agent with his marginal surplus; additionally, for an ex post efficient mechanism, these properties are equivalent to strategy-proofness for the agent. Our results extend to settings with uncertainty; moreover, they have analogs for mechanisms that are only approximately efficient and approximately incentive compatible. Among other applications, our results imply both that under the worker-optimal stable mechanism, workers are incentivized to make efficient human capital investments before entering the labor market, and that second-price auctions induce efficient bidder participation.
Keywords
Strategy-proofness; Investment Efficiency; Providing Marginal Rewards; Vickrey-Clarke-Groves Mechanisms; Mechanism Design; Market Design; Human Capital
Citation
Hatfield, John William, Fuhito Kojima, and Scott Duke Kominers. "Strategy-Proofness, Investment Efficiency, and Marginal Returns: An Equivalence." Working Paper, January 2015.