Choosing Wisely: A Multibidding Approach

Abstract

We analyze situations in which a group of agents (and possibly a designer) have to reach a decision that will affect all the agents. Examples of such scenarios include the selection of a candidate, the location of a nuclear reactor or the siting of a major sports event. To address the problem of reaching a decision, we propose a one-stage multi-bidding mechanism in which agents submit bids to determine the winning project. All Nash equilibria of this mechanism are efficient and immune to any coalitional deviations.Moreover, the payoffs attained in equilibrium by the agents satisfy intuitively appealing lower bounds. (JEL D78, D62) 2 Reaching decisions about the location of noxious facilities, such as dump-sites, environmentally hazardous plants, nuclear power generators and the like, is a highly contentious issue. For instance, in February 2000, the US Senate decided that nationwide

Proposal power and majority rule in multilateral bargaining with costly recognition

“…Opening up this "black box" may provide further insights. For instance, in an interesting line of research, Perez-Castrillo and Wettstein [28,29] investigate the implementation of Shapley value through noncooperative behavior. In their mechanism, agents initially bid to be the proposer, and then the winner proposes how to share the coalition's surplus.…”

“…Perhaps equally important is the distribution of surplus, and it is well-known that the distribution is skewed toward the proposer's favor, as he gains a (temporary) monopoly power over nonproposers. 28 The extent of this power, however, hinges critically on the nonproposers' ability to reject an offer and wait for future ones. To investigate various factors that affect the equilibrium distribution of surplus, I restrict the previous analysis and assume that agents are identical, i.e., c i = c and i = for all i ∈ N .…”

“…Since each player is equally likely to be in a winning coalition when not the proposer, ij = k−1 n−1 = r and i = k−1 n = r(n−1) n . 28 An obvious source of this monopoly power is nonproposers' discounting of the future. For nonunanimity voting rules, even if they do not discount the future, nonproposers may still value the future less, because of the fear of not being included in the winning coalition.…”

“…A noteworthy feature of his model is that no equilibrium efforts are expended in pure strategies. Also related to my work is the literature, e.g., Perez-Castrillo and Wettstein [28,29], which tries to implement the Shapley value through a noncooperative game involving bidding for the right to propose. I elaborate on the link between my work and this literature in the concluding section, when I discuss possible extensions.…”

Free triples, large indifference classes and the majority rule

“…Of course, voting is only one of the possible methods to choose an agent to play a role. In certain contexts, especially if side payments are possible, these roles may be auctioned (Pérez-Castrillo and Wettstein, 2002). But voting is, to say the least, one of the most prevailing methods to choose agents, and it is good to know about conditions where its simplest version, simple majority, will work properly.…”