Abstract
This paper introduces dynamic mechanism design in an elementary fashion. We first examine optimal dynamic mechanisms: We find necessary and sufficient conditions for perfect Bayesian incentive compatibility and formulate the optimal dynamic mechanism problem. We next examine efficient dynamic mechanisms: We establish the uniqueness of Groves mechanism and investigate budget balance of the dynamic pivot mechanism in some detail for a bilateral trading environment. This introduction reveals that many results and techniques of static mechanism design can be straightforwardly extended and adapted to the analysis of dynamic settings.
| Original language | English |
|---|---|
| Pages (from-to) | 92-121 |
| Number of pages | 30 |
| Journal | Journal of Economic Theory and Econometrics |
| Volume | 32 |
| Issue number | 2 |
| Publication status | Published - 2021 Jun |
Keywords
- Budget Balance
- Efficient Mechanism
- Incentive Compatibility
- Markov Process
- Optimal Mechanism
ASJC Scopus subject areas
- Economics and Econometrics