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Publications
Publications
  • 2015
  • Working Paper

Strategy-Proofness, Investment Efficiency, and Marginal Returns: An Equivalence

By: John William Hatfield, Fuhito Kojima and Scott Duke Kominers
  • Format:Print
  • | Language:English
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Abstract

We show that a mechanism induces an agent to make efficient ex ante investment choices if and only if it rewards that agent with his marginal surplus; additionally, for an ex post efficient mechanism, these properties are equivalent to strategy-proofness for the agent. Our results extend to settings with uncertainty; moreover, they have analogs for mechanisms that are only approximately efficient and approximately incentive compatible. Among other applications, our results imply both that under the worker-optimal stable mechanism, workers are incentivized to make efficient human capital investments before entering the labor market, and that second-price auctions induce efficient bidder participation.

Keywords

Strategy-proofness; Investment Efficiency; Providing Marginal Rewards; Vickrey-Clarke-Groves Mechanisms; Mechanism Design; Market Design; Human Capital

Citation

Hatfield, John William, Fuhito Kojima, and Scott Duke Kominers. "Strategy-Proofness, Investment Efficiency, and Marginal Returns: An Equivalence." Working Paper, January 2015.
  • SSRN

About The Author

Scott Duke Kominers

Entrepreneurial Management
→More Publications

More from the Authors

    • June 2025
    • Journal of Finance

    Collusion in Brokered Markets

    By: John William Hatfield, Scott Duke Kominers and Richard Lowery
    • March 14, 2025
    • Harvard Crimson

    Harvard Students Should Ignore Calls to Boycott Israel Trek

    By: Jesse M. Fried, Paul A. Gompers, Scott Kominers and Mark C. Poznansky
    • March 2025
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    O2X: Optimizing to the X

    By: Scott Duke Kominers, Thomas Jennings and Maisie Wiltshire-Gordon
More from the Authors
  • Collusion in Brokered Markets By: John William Hatfield, Scott Duke Kominers and Richard Lowery
  • Harvard Students Should Ignore Calls to Boycott Israel Trek By: Jesse M. Fried, Paul A. Gompers, Scott Kominers and Mark C. Poznansky
  • O2X: Optimizing to the X By: Scott Duke Kominers, Thomas Jennings and Maisie Wiltshire-Gordon
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