Notes of Contract Econ 537

Aug. 31, 2009

  • Revelation Principle (very important)
  • Individual rationality constraint
  • Incentive compatible/ incentive compatibility

After class

Revelation Principle
In textbook, the utility function has no y(.), but teacher has y(.). y(.) can't appear in the process of finding y(.), but maybe also can appear, if we think the y as a unknown variable, then solve it.

Sep. 21, 2009

  • Nash equilibrium, each player knows others' strategies, and no one can benefit by just changing his/her own action.
  • First price auction
  • second price auction, also call Vickery auction, like ebay auction.
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