Minimum cost connection networks: Truth-telling and implementation

Hougaard, Jens Leth and Tvede, Mich (2015) Minimum cost connection networks: Truth-telling and implementation. Journal of Economic Theory, 157. pp. 76-99. ISSN 0022-0531

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    Abstract

    In the present paper we consider the allocation of costs in connection networks. Agents have connection demands in form of pairs of locations they want to have connected. Connections between locations are costly to build. The problem is to allocate costs of networks satisfying all connection demands. We use a few axioms to characterize allocation rules that truthfully implement cost minimizing networks satisfying all connection demands in a game where: (1) a central planner announces an allocation rule and a cost estimation rule; (2) every agent reports her own connection demand as well as all connection costs; (3) the central planner selects a cost minimizing network satisfying reported connection demands based on the estimated costs; and, (4) the planner allocates the true costs of the selected network. It turns out that an allocation rule satisfies the axioms if and only if relative cost shares are fixed.

    Item Type: Article
    Uncontrolled Keywords: axiomatic characterization,connection networks,cost sharing,implementation,truth-telling
    Faculty \ School: Faculty of Social Sciences > School of Economics
    Related URLs:
    Depositing User: Pure Connector
    Date Deposited: 04 May 2017 06:10
    Last Modified: 06 Nov 2018 15:45
    URI: https://ueaeprints.uea.ac.uk/id/eprint/63376
    DOI: 10.1016/j.jet.2014.12.009

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