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5.7 Let us apply the pivotal mechanism to some realized type profiles. Suppose that the types (valuation of the project) are =(5, 15, -10). 1)
5.7 Let us apply the pivotal mechanism to some realized type profiles. Suppose that the types (valuation of the project) are =(5, 15, -10). 1) What is the efficient decision rule? The project should begin if the values add up to a positive sum. In this case, constructing the project makes sense because 5 + 15 - 10 = 10. 2) Who is pivotal? The pivotal agent is the agent whose type modifies the result. Even when the first agent (value of 5) is eliminated, the total is still positive at five. If we remove the second (valuation 15), the project becomes inefficient and the total drops to -5. For this reason, the second agent is essential. 3) Determine the ti's. The social worth is changed by 15 when they are removed, leading to t2 = -15 (they are compensated). Some do not pay: t1 = t3 = 0. 4) Is each agent pursuing a dominant strategy.? It is preferable for every agent to give their own review, regardless of what other people may believe
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