Skip to main content

The robustness of the independent private value model in Bayesian mechanism design

Summary.

In a Bayesian model of group decision-making, dependence among the agents' types has been shown to have a beneficial effect on the design of incentive compatible mechanisms that achieve the efficient choice associated with complete information. This effect is shown here to depend as much upon the use of large monetary transfers among the agents as it does upon dependence: if the transfers are bounded in magnitude, then nonexistence in the case of independence of an efficient, incentive compatible, ex ante budget-balanced and interim individually rational mechanism is robust to the introduction of a small amount of dependence among types. This robustness result supports the use of the simplifying assumption of independence in mechanism design.

This is a preview of subscription content, access via your institution.

Author information

Affiliations

Authors

Additional information

Received: October 28, 1996; revised version: May 28, 1997

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Kosmopoulou, G., Williams, S. The robustness of the independent private value model in Bayesian mechanism design. Economic Theory 12, 393–421 (1998). https://doi.org/10.1007/s001990050227

Download citation

  • JEL Classification Numbers: D82
  • C7
  • D7.