SFB 303 Discussion Paper No. A - 321
Author: Kamecke, Ulrich
Title: A Strategic Interpretation of the Gale Shapley Algorithm in a Multi-Item
Abstract: This paper presents a model in which the Gale-Shapely algorithm is used
by rational agents to construct the outcome of a one-to-one matching problem
in a multi-item oral auction. The sellers' evaluations of the items are
common knowledge while the buyers' evaluations are private information. If
the buyers bid for the items and an auctioneer rejects the insufficient
offers then the GS-algorithm is the only outcome which survives the iterated
elimination of dominated strategies. If the sellers keep or reject the bids
then the GS-algorithm is the unique strictly perfect equilibrium. An
example shows that the conditions of a perfect equilibrium are not
sufficient to exclude all the unreasonable outcomes.
Creation-Date: October 1990
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