Dominant Strategy Mechanism Design

Book Reviews

Journal of Economic Literature ◽

10.1257/jel.54.2.589.r1 ◽

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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Mechanism design without quasilinearity

Theoretical Economics ◽

10.3982/te2910 ◽

2020 ◽

Vol 15 (2) ◽

pp. 511-544 ◽

Cited By ~ 5

Author(s):

Tomoya Kazumura ◽

Debasis Mishra ◽

Shigehiro Serizawa

Keyword(s):

Mechanism Design ◽

Dominant Strategy ◽

Monotonicity Property ◽

Allocation Rule ◽

Type Space ◽

Outside Option ◽

Incentive Compatible ◽

Type Spaces ◽

Good Provision ◽

Strategy Incentive

This paper studies a model of mechanism design with transfers where agents' preferences need not be quasilinear. In such a model, (i) we characterize dominant strategy incentive compatible mechanisms using a monotonicity property, (ii) we establish a revenue uniqueness result (for every dominant strategy implementable allocation rule, there is a unique payment rule that can implement it), and (iii) we show that every dominant strategy incentive compatible, individually rational, and revenue‐maximizing mechanism must charge zero payment for the worst alternative (outside option). These results are applicable in a wide variety of problems (single object auction, multiple object auction, public good provision, etc.) under suitable richness of type space. In particular, our results are applicable to two important type spaces: (a) type space containing an arbitrarily small perturbation of quasilinear type space and (b) type space containing all positive income effect preferences.

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Obviousness around the clock

Experimental Economics ◽

10.1007/s10683-021-09720-z ◽

2021 ◽

Author(s):

Yves Breitmoser ◽

Sebastian Schweighofer-Kodritsch

Keyword(s):

Mechanism Design ◽

Behavioral Effect ◽

Dominant Strategy ◽

Drop Out ◽

Behavioral Differences ◽

Feedback Effects ◽

Private Values ◽

Price Auction ◽

Second Price Auction ◽

Auction Formats

AbstractLi (Am Econ Rev 107(11):3257–3287, 2017) introduces a theoretical notion of obviousness of a dominant strategy, to be used as a refinement in mechanism design. This notion is supported by experimental evidence that bidding is closer to dominance in the dynamic ascending-clock auction than the static second-price auction (private values), noting that dominance is theoretically obvious in the former but not the latter. We replicate his experimental study and add three intermediate auction formats that decompose the designs’ differences to quantify the cumulative effects of (1) simply seeing an ascending-price clock (after bid submission), (2) bidding dynamically on the clock, and (3) getting (theoretically irrelevant) drop-out information about other bidders. The theory predicts dominance to become obvious through (2), dynamic bidding. We find no significant behavioral effect of (2), however, while the feedback effects (1) and (3) are highly significant. We conclude that behavioral differences between second-price and ascending-clock auctions offer rather limited support for the theory of obviousness and that framing has surprisingly large potential in mechanism design.

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Learning and Mechanism Design: An Experimental Test of School Matching Mechanisms with Intergenerational Advice

The Economic Journal ◽

10.1093/ej/uez024 ◽

2019 ◽

Vol 129 (623) ◽

pp. 2779-2804 ◽

Cited By ~ 8

Author(s):

Tingting Ding ◽

Andrew Schotter

Keyword(s):

Social Learning ◽

Mechanism Design ◽

Experimental Test ◽

Real World ◽

Dominant Strategy ◽

Truth Telling ◽

The Real ◽

Incentive Compatible ◽

Short Period ◽

Incentive Compatible Mechanism

Abstract While the mechanisms that economists design are typically static, one-shot games, in the real world, mechanisms are used repeatedly by generations of agents who engage in them for a short period of time and then pass on advice to their successors. Hence, behaviour evolves via social learning and may diverge dramatically from that envisioned by the designer. We demonstrate that this is true of school matching mechanisms—even those for which truth-telling is a dominant strategy. Our results indicate that experience with an incentive-compatible mechanism may not foster truthful revelation if that experience is achieved via social learning.

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