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Essays in Mechanism DesignJanuary 2011 (has links)
This thesis addresses problems in the area of mechanism design. In many settings in winch collective decisions are made, individuals' actual preferences are not publicly observable. As a result, individuals should be relied on to reveal this information. We are interested in an important application of mechanism design, which is the construction of desirable procedures for deciding upon resource allocation or task assignment. We make two main contributions. First, we propose a new mechanism for allocating a divisible commodity between a number of buyers efficiently and fairly. Buyers are assumed to behave as price-anticipators rather than as price-takers. The proposed mechanism is as parsimonious as possible, in the sense that it requires participants to report a one-dimensional message (scalar strategy) instead of an entire utility function, as required by Vickrey-Clarke-Groves (VCG) mechanisms. We show that this mechanism yields efficient allocations in Nash equilibria and moreover, that these equilibria are envy-free. Additionally, we present distinct results that this mechanism is the only simple scalar strategy mechanism that both implements efficient Nash equilibria and satisfies the no envy axiom of fairness. The mechanism's Nash equilibria are proven to satisfy the fairness properties of both Ranking and Voluntary Participation. Our second contribution is to develop optimal VCG mechanisms in order to assign identical economic "bads" (for example, costly tasks) to agents. An optimal VCG mechanism minimizes the largest ratio of budget imbalance to efficient surplus over all cost profiles. The optimal non-deficit VCG mechanism achieves asymptotic budget balance, yet the non-deficit requirement is incompatible with reasonable welfare bounds. If we omit the non-deficit requirement, individual rationality greatly changes the behavior of surplus loss and deficit loss. Allowing a slight deficit, the optimal individually rational VCG mechanism becomes asymptotically budget balanced. Such a phenomenon cannot be found in the case of assigning economic "goods."
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