4. The mechanism designer must allocate 10 identical objects. There is no cost asso- ciated with allocating the objects. There are more than 10 individuals interested B C D Vв(a) VB -2 -1 vc(a) -5 vc -5 vp(a) -1 -2 VD Table 1 - Negative consumption externality in receiving an object. Each individual i would like to receive at most one object. The utility of individual i is given by Ui = vigi - ti, where vi is i's private value for receiving an object, and qi = 1 if i receives an object and qi = 0 otherwise. (a) Find all Pareto efficient outcomes. (b) Find the VCG mechanism for this problem. (c) Does the VCG mechanism run a deficit?
4. The mechanism designer must allocate 10 identical objects. There is no cost asso- ciated with allocating the objects. There are more than 10 individuals interested B C D Vв(a) VB -2 -1 vc(a) -5 vc -5 vp(a) -1 -2 VD Table 1 - Negative consumption externality in receiving an object. Each individual i would like to receive at most one object. The utility of individual i is given by Ui = vigi - ti, where vi is i's private value for receiving an object, and qi = 1 if i receives an object and qi = 0 otherwise. (a) Find all Pareto efficient outcomes. (b) Find the VCG mechanism for this problem. (c) Does the VCG mechanism run a deficit?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter18: Public Economy
Section: Chapter Questions
Problem 6SCQ: Anastasia, Emma, and Greta are deciding what to do on a weekend getaway. They each suggest a first,...
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![4. The mechanism designer must allocate 10 identical objects. There is no cost asso-
ciated with allocating the objects. There are more than 10 individuals interested
B C D
vB(a) VB
-2
-1
vc(a) -5
-5
vp(a)
-1 -2
UD
Table 1 - Negative consumption externality
in receiving an object. Each individual i would like to receive at most one object.
The utility of individual i is given by
Ui = Viqi – ti,
where vi is i's private value for receiving an object, and qi = 1 if i receives an
object and q; = 0 otherwise.
(a) Find all Pareto efficient outcomes.
(b) Find the VCG mechanism for this problem.
(c) Does the VCG mechanism run a deficit?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7ab2fcdd-e673-450e-8879-48d7de8ef6bd%2F082eae7f-bdb8-4053-9783-cd346243ae2f%2Flta0q2q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. The mechanism designer must allocate 10 identical objects. There is no cost asso-
ciated with allocating the objects. There are more than 10 individuals interested
B C D
vB(a) VB
-2
-1
vc(a) -5
-5
vp(a)
-1 -2
UD
Table 1 - Negative consumption externality
in receiving an object. Each individual i would like to receive at most one object.
The utility of individual i is given by
Ui = Viqi – ti,
where vi is i's private value for receiving an object, and qi = 1 if i receives an
object and q; = 0 otherwise.
(a) Find all Pareto efficient outcomes.
(b) Find the VCG mechanism for this problem.
(c) Does the VCG mechanism run a deficit?
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