Econometrica: Mar, 2010, Volume 78, Issue 2
The Dynamic Pivot Mechanism
Dirk Bergemann, Juuso Välimäki
We consider truthful implementation of the socially efficient allocation in an independent private‐value environment in which agents receive private information over time. We propose a suitable generalization of the pivot mechanism, based on the marginal contribution of each agent. In the dynamic pivot mechanism, the ex post incentive and ex post participation constraints are satisfied for all agents after all histories. In an environment with diverse preferences it is the unique mechanism satisfying ex post incentive, ex post participation, and efficient exit conditions.
Supplement to "The Dynamic Pivot Mechanism"
PDF document that shows the socially efficient solution to the scheduling problem of section 3 in the manuscript. It also shows a slight modification of the example where the bidding mechanism is inefficient.