King Solomon’s Dilemma: An Experimental Study on Implementation

This paper reports an experiment conducted to compare two mechanisms that provide solutions to the 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 for her. Our results show that the Perry and Reny’s mechanism performs on average as well as the Moore’s mechanism allocating the object to the rightful player at zero cost. However, implemented under incomplete information or using an ascending-clock auction, the Perry and Reny’s mechanism performs significantly better than the Moore’s mechanism.