Mechanism design with budget constraints and a population of agents

B-Tier
Journal: Games and Economic Behavior
Year: 2019
Volume: 115
Issue: C
Pages: 30-47

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper finds welfare- and revenue-maximizing mechanisms for assigning a divisible good to a population of budget-constrained agents who have independently distributed private valuations and budgets without unit-demand. Both optimal mechanisms feature a linear price for the good. The welfare-maximizing mechanism additionally has a uniform lump-sum transfer to all agents and a higher linear price than the revenue-maximizing mechanism. This transfer increases welfare because it ameliorates the key difficulty in the aforementioned setting: agents with high valuations cannot purchase an efficient amount of the good due to their budget constraints. Finally, in an extension, I relax the independence between valuations and budgets. In an online appendix, I consider production and large finite markets.

Technical Details

RePEc Handle
repec:eee:gamebe:v:115:y:2019:i:c:p:30-47
Journal Field
Theory
Author Count
1
Added to Database
2026-01-29