Mechanism Design

We now consider the implementation of specific mechanisms.

Elements

1. 4.4.aTop Trading Cycles

   The ability to compute and run the top trading cycles algorithm in finding a stable allocation.

2. 4.4.bOptimal Auction for Bidders with Differing Risk Attitudes

   The ability to select the correct revenue maximizing auction when bidders are not risk-neutral. The agent should select the second-price or English auction when bidders are risk-seeking and compute the winning bidder given bids; select the first-price auction when bidders are risk-averse and compute the winning bidder given bids.

3. 4.4.cOptimal Auction for Bidders with Affiliated Values

   The ability to select the correct revenue maximizing auction when each bidder's value has an additional common-value component (e.g., the bidder's private, noisy signal about the good’s resale value). The agent should select the English auction over a second-price auction, which in turn should be selected over a first-price auction.