Abstract
This chapter presents a systematic method for constructing and classifying individually incentive-compatible mechanisms that lead to Pareto-optimal allocations of public and private goods at each Nash noncooperative equilibrium in messages and balance the budget at each such allocation. The equilibrium concept and setup that is used is the same as that used by Groves and Ledyard. The papers by Groves and Ledyard present a very clever set of quadratic tax functions that turn out to be individually incentive compatible and to balance the budget, but the way in which Groves and Ledyard came upon these particular functions is not spelled out in their papers.
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