
Abstract
A budget-constrained buyer wants to purchase items from a short-listed set. Items are differentiated by observable quality and sellers have private reserve prices for their items. The buyer’s problem is to select a subset of maximal quality. Money does not enter the buyer’s objective function, but only his constraints. Sellers quote prices strategically, inducing a knapsack game. We derive the Bayesian optimal mechanism for the buyer’s problem. We ?nd that simultaneous take-it-or-leave-it offers are optimal. Hence, somewhat surprisingly, ex-postcompetition is not required to implement optimality. Finally, we discuss the problem in a detail free setting.
Item Type: | Paper |
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Keywords: | Mechanism Design, Subsidies, Budget, Procurement, Knapsack Problem |
Faculties: | Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A7 - Auktionen, Anreizprobleme und Wettbewerb |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | D21, D44, D45, D82 |
URN: | urn:nbn:de:bvb:19-epub-13203-7 |
Language: | English |
Item ID: | 13203 |
Date Deposited: | 10. Jul 2012, 13:06 |
Last Modified: | 04. Nov 2020, 12:53 |