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On incentive compatibility and budget balancedness in public decision making

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Abstract

Holmström (Groves' schemes on restricted domains,Econometrica 47, 1979, pp. 1137–1144) showed for public decision making problems with a smoothly connected domain of preferences that Groves' schemes are the unique direct revelation mechanisms satisfying incentive compatibility. This paper provides necessary and sufficient conditions on the domain of preferences for which these Groves' schemes are the unique incentive compatible transfer schemes when the number of alternatives is finite. Furthermore, we give an example of a decision making problem that arises from a sequencing problem for which budget balanced Groves' schemes exist and show that these transfer schemes are not individually rational.

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  1. Department of Econometrics and CentER, Tilburg University, PO Box 90153, 5000 LE, Tilburg, the Netherlands

    Jeroen Suijs

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  1. Jeroen Suijs
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Suijs, J. On incentive compatibility and budget balancedness in public decision making. Economic Design 2, 193–209 (1996). https://doi.org/10.1007/BF02499133

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  • DOI: https://doi.org/10.1007/BF02499133

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