Efficient bidding with externalities

Inés Macho-Stadler; David Pérez-Castrillo; David Wettstein

doi:10.1016/j.geb.2005.12.002

Efficient bidding with externalities

Inés Macho-Stadler
, David Pérez-Castrillo
, David Wettstein

Department of Economics

Research output: Contribution to journal › Article › peer-review

21 Scopus citations

Abstract

We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals.

Original language	English
Pages (from-to)	304-320
Number of pages	17
Journal	Games and Economic Behavior
Volume	57
Issue number	2
DOIs	https://doi.org/10.1016/j.geb.2005.12.002
State	Published - 1 Nov 2006

Keywords

Bidding
Externalities
Implementation
Shapley value

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.geb.2005.12.002

Cite this

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abstract = "We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals.",

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AU - Macho-Stadler, Inés

AU - Pérez-Castrillo, David

AU - Wettstein, David

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N2 - We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals.

AB - We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals.

KW - Bidding

KW - Externalities

KW - Implementation

KW - Shapley value

UR - https://www.scopus.com/pages/publications/33749646525

U2 - 10.1016/j.geb.2005.12.002

DO - 10.1016/j.geb.2005.12.002

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SP - 304

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JO - Games and Economic Behavior

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IS - 2

ER -

Efficient bidding with externalities

Abstract

Keywords

ASJC Scopus subject areas

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