Vickrey-Clarke-Groves Mechanisms

Question 1

What is the individual profit in a VCG mechanism?

Answer 1

TS with individual − TS without individual.

Question 2

What is the dominant strategy in a VCG mechanism?

Answer 2

Truthtelling is a dominant strategy for all and the outcome is efficient.

Question 3

What are the main characteristics of the VCG mechanisms?

Answer 3

Truthtelling is a dominant
strategy, and the efficient choice is always implemented.

Question 4

What is the individual payment in a VCG mechanism equivalent to?

Answer 4

ti = surplus of others if i is absent − surplus of others if i is present

Question 5

What is the main limitation of the VCG mechanisms?

Answer 5

They can run a deficit (no budget balance)

Question 6

What is the result of the limitation of the VCG mechanisms?

Answer 6

An impossibility result: there is no budget balanced and efficient mechanism that is dominant strategy incentive compatible. First-best is not attainable, second best may offer a budget balance.