Essays in strategic cost sharing
Doctor of Philosophy thesis
A mechanism elicits the monetary valuations from the agents for getting a unit of good (or service), allocates some goods to some agents and charge some money only to the agents who are served. We study welfare and incentive compatibility properties of these mechanisms. We compare two familiar mechanisms in an economy with increasing marginal cost, random priority (RP) and average cost (AC). We find that RP unambiguously performs better than AC using the worst-absolute surplus loss measure. In similar economies, we characterize the mechanisms that, are immune to coordinated misreports of any group of agents and provide optimal mechanisms for different shapes of cost functions using the worst absolute surplus loss.