9372016-03 , Institute of Economic Research, Kyoto University
This paper considers dynamic resource allocation processes, called iterative revelation mechanisms, with quasi-linear dichotomous utilities and complete information. Agents gradually reveal their valuation through binary questions. The social planner identifies the efficient outcome, and monetary transfer is determined on a "pay-as-bid" basis. We show that the efficient allocation rule is implemented in a subgame perfect Nash equilibrium, regardless of details of a binary-question process. The analysis applies to the case with limited communication, and every strongly monotone allocation rule is implemented in equilibrium. We also show that if a resource allocation process is ex post incentive compatible, it is an ascending-price mechanism. fu a single-object allocation problem, the English auction is a unique mechanism satisfying efficiency, ex post incentive compatibility, and pay-as-bid transfer.