Implementability by a Canonical Indirect Mechanism of an Optimal Two-Dimensional Direct Mechanism

Abstract

The present paper investigates the multi-dimensional mechanism design in which buyers have taste and budget as their private information. The paper shows an easy proof of a two-dimensional optimal direct mechanism by a one-dimensional indirect mechanism: A canonical mechanism in the traditional one-dimensional setting, i.e., function of one variable, the buyer’s taste. It also sheds light on where the difficulty lies implementability of a general direct mechanism—not optimal—by a canonical mechanism.