SFB 303 Discussion Paper No. A - 275

Author: Yang, Chun-Lei
Title: Unique Implementation of the King Solomon Dilemma by Successive Elimination of Dominated Strategies
Abstract: The problem of awarding a prize to the person with the highest private value without any sidepayment is identified as the King Solomon dilemma by Glazer and Ma [3]. We solve this problem in an incomplete information setting using the solution concept of successive elimination of weakly dominated strategies. We also show that the unique outcome is the only invariant one with respect to different elimination procedures. A class of unreasonable sequential equilibria yielding some undesired outcomes is constructed, and the notion of successive elimination is given some further justification in light of common knowledge theory.
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Creation-Date: January 1990
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