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Unformatted text preview: A seller wants to sell an object to buyers Each buyer has a valua1on vi Vickrey auc)on: allocate the object to the buyer who submits the highest bid, but make her pay the bid of the second highest bidder In a Vickrey auc1on, every bidder had the dominant strategy to announce bid bi=vi Don't want to bid more than vi because could end up paying more than you value it Don't want to bid less because you may not win the bid even though you value it more than the winner pays Vickrey-Clarke-Groves Mechanism VCG mechanism applies the intui1on of Vickrey auc1ons to the provision of a public good Agents announce their u1lity func1on for the public good The government chooses the amount of public good that maximizes the reported u1li1es Each agent pays a tax based on the u1li1es that everyone else reported 8...
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This note was uploaded on 01/18/2012 for the course PADP 6950 taught by Professor Fergi during the Spring '11 term at University of Georgia Athens.
- Spring '11