Robust Mechanism Design of Exchange

2020 ◽  
Author(s):  
Pasha Andreyanov ◽  
Tomasz Sadzik
Keyword(s):  
Mechanism Design ◽  
Private Information ◽  
Information Structure ◽  
Utility Functions ◽  
Double Auction ◽  
Exchange Economies ◽  
Incentive Compatible ◽  
Ex Post ◽  
Interdependent Values ◽  
Robust Mechanism Design

Abstract In this article, we provide mechanisms for exchange economies with private information and interdependent values, which are ex post individually rational, incentive compatible, generate budget surplus, and are ex post nearly efficient, with many agents. Our framework is entirely prior-free, and we make no symmetry restrictions. The mechanisms can be implemented using a novel discriminatory conditional double auction, without knowledge of information structure or utility functions. We also show that no other mechanism satisfying the constraints can generate inefficiency of smaller order.

The Marriage Problem with Interdependent Preferences

2020 ◽  
Vol 22 (02) ◽  
pp. 2040005
Author(s):  
Mohsen Pourpouneh ◽  
Rasoul Ramezanian ◽  
Arunava Sen
Keyword(s):  
Private Information ◽  
Common Knowledge ◽  
Priority Rules ◽  
Marriage Problem ◽  
Interdependent Preferences ◽  
Incentive Compatible ◽  
Ex Post ◽  
Women’S Preferences ◽  
Matching Rules

This paper considers the Gale–Shapley model with interdependent preferences. Women’s preferences over men are common knowledge but whether or not a man is acceptable depends on the preferences of men which are private information. It is shown that no ex-post incentive-compatible and ex-post stable matching rules exist. A characterization of ex-post incentive-compatible, ex-post individually rational and ex-post nonbossy matching rules in terms of modified priority rules is provided.

scholarly journals Ex-post implementation with social preferences

2020 ◽  
Author(s):  
Boaz Zik
Keyword(s):  
Mechanism Design ◽  
Current Literature ◽  
Private Information ◽  
Social Preference ◽  
Social Preferences ◽  
Incentive Compatibility ◽  
Higher Order ◽  
The Other ◽  
Ex Post ◽  
Ex Post Implementation

Abstract The current literature on mechanism design in models with social preferences discusses social-preference-robust mechanisms, i.e., mechanisms that are implementable in any environment with social preferences. The literature also discusses payoff-information-robust mechanisms, i.e., mechanisms that are implementable for any belief and higher-order beliefs of the agents about the payoff types of the other agents. In the present paper, I address the question of whether deterministic mechanisms that are robust in both of these dimensions exist. I consider environments where each agent holds private information about his personal payoff and about the existence and extent of his social preferences. In such environments, a mechanism is robust in both dimensions only if it is ex-post implementable, i.e., only if incentive compatibility holds for every realization of payoff signals and for every realization of social preferences. I show that ex-post implementation of deterministic mechanisms is impossible in such environments; i.e., deterministic mechanisms that are both social-preference-robust and payoff-information-robust do not exist.

Veto Constraint in Mechanism Design: Inefficiency with Correlated Types

2009 ◽  
Vol 1 (1) ◽  
pp. 182-206 ◽  
Author(s):  
Olivier Compte ◽  
Philippe Jehiel
Keyword(s):  
Mechanism Design ◽  
Private Information ◽  
Exact Form ◽  
Outside Option ◽  
Outside Options ◽  
Ex Post ◽  
Bargaining Problems

We consider bargaining problems in which parties have access to outside options, the size of the pie is commonly known and each party privately knows the realization of her outside option. We allow for correlations in the distributions of outside options. Parties have a veto right, which allows them to obtain at least their outside option payoff in any event. Besides, agents can receive no subsidy ex post. We show that inefficiencies are inevitable whatever the exact form of correlation, as long as private information is dispersed. We also illustrate how veto constraints differ from ex post participation constraints. (JEL C78, D82)

scholarly journals Pareto Efficient Auctions with Interest Rates

2019 ◽  
Vol 33 ◽  
pp. 1989-1995
Author(s):  
Gagan Goel ◽  
Vahab Mirrokni ◽  
Renato Paes Leme
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Utility Functions ◽  
Limited Access ◽  
Incentive Compatible ◽  
Pareto Efficient ◽  
Available Resources

We consider auction settings in which agents have limited access to monetary resources but are able to make payments larger than their available resources by taking loans with a certain interest rate. This setting is a strict generalization of budget constrained utility functions (which corresponds to infinite interest rates). Our main result is an incentive compatible and Pareto-efficient auction for a divisible multi-unit setting with 2 players who are able to borrow money with the same interest rate. The auction is an ascending price clock auction that bears some similarities to the clinching auction but at the same time is a considerable departure from this framework: allocated goods can be de-allocated in future and given to other agents and prices for previously allocated goods can be raised.

Book Reviews

2016 ◽  
Vol 54 (2) ◽  
pp. 589-591
Keyword(s):  
Graduate Students ◽  
Mechanism Design ◽  
Incentive Compatibility ◽  
Dominant Strategy ◽  
University Of Michigan ◽  
Dynamic Mechanism Design ◽  
Temple University ◽  
The University ◽  
Robust Mechanism Design

Dimitrios Diamantaras of Temple University reviews “An Introduction to the Theory of Mechanism Design,” by Tilman Börgers. The Econlit abstract of this book begins: “Presents explanations of classic results in the theory of mechanism design and examines the frontiers of research in mechanism design in a text written for advanced undergraduate and graduate students of economics who have a good understanding of game theory. Discusses screening; examples of Bayesian mechanism design; examples of dominant strategy mechanisms; incentive compatibility; Bayesian mechanism design; dominant strategy mechanisms; nontransferable utility; informational interdependence; robust mechanism design; and dynamic mechanism design. Börgers is Samuel Zell Professor of the Economics of Risk at the University of Michigan.”

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