TITLE:
Implementability by a Canonical Indirect Mechanism of an Optimal Two-Dimensional Direct Mechanism
AUTHORS:
Naoki Kojima
KEYWORDS:
Multi-Dimensional Mechanism, Indirect Mechanism, Budget Constraint, Revelation Principle
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.2,
February
27,
2017
ABSTRACT: The present paper investigates
the multi-dimensional mechanism design in which
buyers have taste and budget as their private information. The paper shows an easy proof of a two-dimensional optimal
direct mechanism by a one-dimensional
indirect mechanism: A canonical mechanism in the traditional
one-dimensional setting, i.e., function
of one variable, the buyer’s
taste. It also sheds light on where the
difficulty lies implementability of a general direct mechanism—not optimal—by a canonical mechanism.