“Neither I nor you shall have him”: An experimental study of the King Solomon's Dilemma

• Published in: Journal of behavioral and experimental economics Vol. 70; pp. 55 - 69
• Main Authors: Elbittar, Alexander, Di Giannatale, Sonia
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.10.2017
• Subjects: Behavioral economics; Implementation theory; Laboratory experiments; Rivalrous behavior; Implementation theory; Rivalrous behavior; C7; Behavioral economics; Laboratory experiments; C9
• ISSN: 2214-8043; 2214-8051
• DOI: 10.1016/j.socec.2017.08.001

•An experiment to compare 2 mechanisms that solve King Solomon's Dilemma is designed.•The mechanisms are: Perry and Reny's mechanism (PRM) and Moore's mechanism (MM).•Under complete information, MM shows less waste of resources.•PRM performs when implemented using ascending and the slow ascending clock auctions.•Evidence of rivalrous behavior from low value players is found. This paper reports the results of an experiment designed to compare two mechanisms that provide solutions to King Solomon's Dilemma. One of them is proposed by Moore (1992) and the other by Perry and Reny (1999). The objective of each mechanism is to allocate a single unit of an indivisible private good to the player with the highest reservation value at zero cost to her. Implemented in an environment with complete information Moore's mechanism, compared with Perry and Reny's mechanism, shows a lower rate of wasteful use of resources, but we could not find evidence that this mechanism has a better rate in allocating the object to the right player. The use of either the ascending clock or the slow ascending clock improves the performance of Perry and Reny's mechanism in allocating the object to the right player at zero cost in both informational environments. Finally, we find evidence of a higher likelihood of low value players staying with the object when their valuation for the object increases and when they know the valuation of their opponents; however, the monetary amount they have to pay for staying with the object plays a relevant role in this decision.