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?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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