2.3 VCG ( Vickrey-Clarke-Groves) Mechanism In this particular sization each mommate states how much -cey value the machine. Call this b; (or o, if you want w we wheely mon general motaden ; According to the VCG mechanism cuch pays to = 50-b2 and t2 = 50 -b1. assuming by + b, 2 50. In other words. are baymen: is only made if the machine is bnight. if We what to show that bidding your wee woundon is a dominant strange, To make li omercy, suppos: you callant is v, = 40. Habla'n way, regardless a" what your room nate bids, a: bidding your valuation (arealdy) domainmes all bide los : law b1 = 40 (in) Explain why hidding greater than 6 is weakly dominated by bidding In. limit This be great! It looks like it is a dominant strategy to bid your true valuation and don the cypressu machine will only be bought when it is allisin to huge it. However. wil his schone ever pent make the nedead lines co actually parchase the express: machine? explain britly. [The moral of the any is that palin bout create irreadele problem'a which them if not way 'n wo. six far relevant. parties to ensure chuc efficiency is achieved. |