RIEB Discussion Paper Series No.2020-17

Title

Implementation in Iterative Elimination of Obviously Dominated Strategies: An Experiment on King Solomon's Dilemma

Abstract

"King Solomon's Dilemma" is based on a biblical story and this can be considered as an allocation problem for an indivisible object among two players. A social planner wants to assign the object without payment to the player whose valuation is the highest. We say that such an allocation is "first-best." We experimentally compare the relative performance of the mechanism of Mihara (Japanese Economic Review, 63(3), 420-429, 2012) and a mechanism which we modify Mihara's mechanism. We find that a modified Mihara's mechanism relatively works better than Mihara's mechanism from the following five view points: (1) the proportion of the first-best allocations; (2) the proportion of the right-player allocations; (3) resource inefficiency and wrong-player infficiency; (4) net mean efficiency; and (5) players' behavior.

Keywords

Implementation in iterative elimination of obviously dominated strategies; King Solomon's Dilemma; Mihara's mechanism; Ascending clock auctions; Laboratory experiment

JEL Classification

C92, D44, D78

Inquiries

Makoto HAGIWARA
Faculty of Economics, Osaka University of Economics
2-2-8, Osumi, Higashiyodogawa-ku, Osaka, 533-8533, Japan
E-mail: m.hagiwara@osaka-ue.ac.jp
Junior Research Fellow, RIEB, Kobe University

Fumihiro YONEKURA
Department of Industrial Engineering and Economics,
School of Engineering, Tokyo Institute of Technology