Questions tagged [mechanism-design]

Mechanism design is a field in economics and game theory that takes an engineering approach to designing economic mechanisms or incentives, toward desired objectives, in strategic settings, where players act rationally.

Filter by
Sorted by
Tagged with
1 vote
0 answers
59 views

How do we have no–envy for the Final Target Score here in assessing the consequences of individual changes on game dynamics and appeal?

Assume that a new Chess-variant designed to increase the level of competition throughout the game, provide additional excitement at the finish: "A Final Target Point will be set." The Final ...
user avatar
3 votes
1 answer
233 views

Single-item single-bidder: why posted price is the only possible DSIC mechanism?

I'm reading Tim Roughgarden's Twenty Lectures on Algorithmic Game Theory. Lecture 5 is on revenue-maximizing auctions. It claims that in the single-parameter qusilinear environment, for the extremely ...
user avatar
2 votes
1 answer
49 views

A question about revelation principle from the game theory online course

I am finding the revelation principle very confusing. So I was watching the Game Theory online course by Stanford and UBC. In their video about revelation principle, here are the original words from ...
user avatar
  • 55
0 votes
1 answer
41 views

Revenue-maximizing auction with no free disposal

Myerson has a famous theory that can be used to design truthful auctions maximizing the revenue of the seller. The simplest case is when a seller sells a single item to buyers whose values are ...
user avatar
0 votes
0 answers
47 views

Auction Theory and Elections

Can we (is it reasonable to) apply auction theory and the various incentive compatible mechanisms to elections and guarantee cardinal voting? I am thinking specifically of VCG auctions and ...
user avatar
4 votes
1 answer
58 views

Equivalence from correlated/communication equilibrium to Nash Equilibrium?

Taking into account the seminal papers of Forges and Imre Bárány, they proove a very strong result that gives an exact connection among the communication and the correlation equilibrium solution ...
user avatar
2 votes
1 answer
49 views

Intuition behind Myerson's characterization of DSIC Single Object Allocation Mechanism

Myerson (1981) states that in a single object allocation problem with quasilinear preferences, where $q_i(.)$ is an allocation function, $p_i(.)$ a payment function and $u_i(.)$ a utility function for ...
user avatar
3 votes
1 answer
48 views

Design of efficient cheap talk communication

Are there any papers about efficient cheap talk communication, where the players achieve the equilibrium payoffs of a correlated strategy as in Aumann's seminal paper? Or in case no such paper exists, ...
user avatar
0 votes
0 answers
40 views

What does social choice theory say about how to assign different positions to every member in a committee?

Consider the following setting: A committee has $N$ members. There are $m$ types of positions in the committee. For each type of positions $1 \leq i \leq m$, there are $n_i$ identitical positions for ...
user avatar
2 votes
1 answer
119 views

Definition of direct revelation mechanism

In Algorithmic Game Theory by Noam Nisan, a (general) mechanism for $n$ player is defined as $$ M=(\{T_i\},\{X_i\},A,\{v_i\},a,\{p_i\}),\tag1 $$ where $T_1,\dots,T_n$ are the players' type spaces (...
user avatar
  • 51
2 votes
1 answer
135 views

Mechanism design making the Government reveil its indiferrence price towards goods

In order to Tax non-monetary property and wealth the government sets an arbitrary price (they are not even personalized assesments) and often people transact below that price. I have bought and sold ...
user avatar
0 votes
0 answers
28 views

Mechanism Design and game theory with stochastic caclulus

Does anybody know if there is a literature that combines mechanism design or market games with dynamic programming or stochastic calculus in general? I have heard about stochastic differential game ...
user avatar
1 vote
0 answers
17 views

What is the difference between a communication mechanism and a protocol of communication?

What is the difference between a communication mechanism and a protocol of communication in mechanism and information design. Although most papers in the literature make this distinction, it is not ...
user avatar
1 vote
0 answers
19 views

Auction mechanism with quoters and price takers

Consider a market with one buyer with a fixed demand and multiple sellers for a divisible good. The goal of the market is to determine a uniform unit-price for the good as well as which seller ...
user avatar
  • 111
3 votes
1 answer
68 views

VCG mechanism and budget balance

I have a general question on how we state that in VCG (which doesn't balance the budget) we can't distribute the money as it will destroy incentives. I don't understand how for ex. this would affect ...
user avatar
2 votes
1 answer
27 views

locating specific model from organizational economics

I am trying to find one specific model from organizational economics that I encountered in one of my past classes, but I cant remember the name of the model and google scholar search based on some of ...
user avatar
  • 41.5k
3 votes
2 answers
225 views

What's the difference between Ex-post Incentive Compatibility and Dominant-Strategy Incentive Compatibility

According to the Wikipedia definition of Dominant-Strategy Incentive Compatibility (DSIC): DSIC means truth-telling is a weakly-dominant strategy, i.e. you fare best or at least not worse by being ...
user avatar
  • 55
1 vote
0 answers
57 views

Revelation principle when the type space is infinite [closed]

Consider a mechanism design problem in which the agents have type spaces that are uncountably infinite. I have a couple of questions which are numbered throughout this post. The revelation principle ...
user avatar
  • 113
4 votes
1 answer
98 views

Payoff from an option contract

In period 1 the consumer of type $\theta$ selects an option contract consisting of an up-front fee, $B>0$, and exercise price, $\bar{R}$. The consumer pays $B$ at the end of the first period. In ...
user avatar
  • 251
2 votes
1 answer
106 views

The influence of restricted type space on incentive compatible mechanism design?

When we are to design an IC mechanism for an auction, we usually assume that each agent $i$'s type $\theta_i$ is draw from its type space $\Theta_i$, which contains all the possible types of $i$. For ...
user avatar
3 votes
1 answer
111 views

Is VCG mechanism applicable in reverse auction? If so, how?

The VCG mechanism I've learnt is from Roughgarden's Twenty Lectures on Algorithmic Game Theory. Given an auction, we first identify the allocation that maximize the social welfare and then compute the ...
user avatar
2 votes
1 answer
49 views

Can you please help me find this topic in Mechanism design/Rational choice theory?

When I was in university, I remember studying some kind of topic in adv microeconomics where someone gives you three options, where one is obviously worse and is put there just to deceive you so that ...
user avatar
  • 141
2 votes
2 answers
44 views

Multi-item multi-unit matching markets

This is a reference request. I'm interested in auction design problems of the following form: - Consider one seller and many buyers. - The seller seeks to sell multiple items where each item has ...
user avatar
  • 593
5 votes
4 answers
316 views

Multi-item Auctions in Mechanism Design

I'm new to auction theory and only started reading it a few days ago. My question is this: Is it possible to design efficient auctions of multiple non-identical items? By efficient I mean maximize the ...
user avatar
  • 593
0 votes
1 answer
31 views

Search terms to find a menu of currency exchange mechanisms?

I'm look to find a good source for comparing mechanism designs for simple currency exchanges. Is there a name for a category of game (e.g. Stackelberg game) that encapsulates the operation of an ...
user avatar
  • 103
3 votes
1 answer
110 views

Decentralized Mechanism Design

From what I've read in mechanism design theory, it seems to me that the mechanism designer always plays an essential role in a mechanism. Information is sent to the designer who designs incentives ...
user avatar
  • 593
0 votes
1 answer
42 views

Efficiency in Auctions

Consider a finite number of bidders, each bidding for a single indivisible object, with private independent values from some probability distribution. There are 2 intuitive notions of (ex-post) ...
user avatar
  • 352
5 votes
2 answers
78 views

Approximately Optimal Mechanism Design vs. Revelation Principle

The abstract of the article "Impossibility Results for Truthful Combinatorial Auctions with Submodular Valuations" (Dobzinski, Vondrak, 2016) states A long-standing open question in algorithmic ...
user avatar
  • 105
2 votes
0 answers
31 views

Mechanism Design and Multidimensional Type Spaces

Is it possible to design a mechanism of agents with multidimensional types? In particular, what if the type space has the following form: $$\Theta_i=\{\theta_i\in\{{1,2,\dots, n}\}\times[0,1]:n\in\...
user avatar
  • 593
6 votes
2 answers
93 views

Auction theory reference request

I am interested in finding the literature or at least some references (books, journal papers etc.) for the following problem: Suppose there is an auction with one seller and one buyer. The seller ...
user avatar
  • 593
2 votes
1 answer
101 views

Allocating chores using auctions

I live in a student dorm with 16 people and we share a kitchen. Every week someone has to clean the kitchen. Right now we just take turns in a way determined by the numbers of our respective rooms. ...
user avatar
  • 41
4 votes
1 answer
35 views

Incentive compatibilty conditions for multi-item auctions

In this paper by Myerson on optimal single item auctions, the incentive compatibility condition is shown to be equivalent to the following simpler conditions on the auction - (i) the allocation ...
user avatar
1 vote
0 answers
23 views

Market mechanism design and decision rule based on a graph

I am doing a micro course right now. I came upon this question while studying and I was hoping for help/hints on how to solve it or what resources to consult to better understand the topic. the ...
user avatar
4 votes
2 answers
92 views

What does commitment in adverse selection mean?

In this slide deck, p15. it says "The revelation principle requires that the principal can fully commit to the terms of the contract. If this is not the case, an indirect mechanism, which allows for ...
user avatar
  • 372
1 vote
1 answer
40 views

Is a resource allocation problem in mechanism design a direct or indirect mechanism?

From L. Hurwicz's work and book "Designing Economic Mechanisms," I cannot figure out whether a resource allocation problem in mechanism design is a direct or indirect mechanism. I think the answer is ...
user avatar
  • 593
0 votes
1 answer
25 views

Renewal of multiple notions of value in contemporary (green, public good) economy and are there general game theories?

https://en.wikipedia.org/wiki/Exchange_value mentions 4 notions of value: economic value, exchange value, use value, price. But this article also mentions that these are Marxian concepts and the ...
user avatar
  • 355
0 votes
0 answers
20 views

Questions regarding 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015

This question is with reference to the paper 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015(See here). At page no. 4 of the paper, the authors describe $v_i$ as the ...
user avatar
  • 515
2 votes
0 answers
44 views

Going from DRMs to Indirect Mechanisms

I have recently started studying mechanism design (after having taken a basic graduate micro course) through Borgers' 'Introduction to the theory of mechanism design'. I was wondering if people are ...
user avatar
1 vote
1 answer
79 views

Price of Anarchy when the cost is to society and not to the selfish agents

Let's say there is some scarce resource and several agents compete to access this resource. Each agent is able to convert the resources into products that are beneficial to society, but each agent has ...
user avatar
  • 429
3 votes
1 answer
99 views

Direct revelation mechanism's sets of strategies and types

Mas-Colell, Whinston and Green in Microeconomic Theory describe the direct revelation mechanism as it follows: The employed notation is the following: $θ_i$: Player i's type $Θ_i$: Set of types for ...
user avatar
  • 259
2 votes
1 answer
87 views

Difference between social choice function and mechanism outcome function

Mas-Colell, Whinston and Green's Microeconomic Theory (3rd edition) defines the social choice function as the following: Later, the mechanism outcome function is also defined: The relationship ...
user avatar
  • 259
2 votes
1 answer
51 views

Bayesian incentive compatibility for a general distribution

Suppose there are $n$ bidders and a seller. Bidder $i$ observes a private signal $v_i$ from $[a,b]$. Let $\mathcal{X} = \times_{i=1}^n[a,b]$ Each bidder is represented by a random variable, that has a ...
user avatar
  • 515
3 votes
1 answer
94 views

Non-Bayesian Mechanism Design

Suppose we have a mechanism where a finite number of agents possess private information that is not drawn from a probability distribution. The agents' types are given and fixed but agents only know ...
user avatar
  • 593
3 votes
1 answer
201 views

AGV mechanism and Individual rationality

I have the following question. I consider AGV mechanism which is as follows: $u_i(x,\theta_i) = v_i(k,\theta_i) + t_i $ is an utility function where $x = (k,t_1,...,t_n)$ vector of alternatives. There ...
user avatar
2 votes
1 answer
111 views

Monotonicity of second price auctions with bidder-specific reserve prices

I am having difficulty understanding the problem below: Given CDFs $F_1, ..., F_n$, prove that the allocation rule of a second-price auction with bidder-specific reserve prices is monotone. The item ...
user avatar
2 votes
0 answers
59 views

Are there any studies, academic papers or articles that defy "common" knowledge", i.e that patents give an incentive for R&D to private business?

In Economic Growth and particularly dynamic optimization. My professor taught us that an intertemporal allocation is a dynamic optimum(Pareto Optimum) only if(necessary condition) at any given ...
user avatar
5 votes
1 answer
86 views

Screening theory: Bundling problem

Consider an example of a risk-neutral seller that has two distinct indivisible goods for sale. The seller wants to maximize the expected revenue. The buyer's utility is $$I_av_a+I_bv_b-t,$$ where $I_a,...
user avatar
  • 593
3 votes
2 answers
147 views

Mechanism Design: Proving that the expected utility is differentiable

Given a direct mechanism, we define a buyer's expected utility $u(\theta)$ conditional on her type being $\theta$ by $u(\theta)=\theta q(\theta)-t(\theta)$, where $q:[\underline{\theta},\bar{\theta}]\...
user avatar
  • 593
5 votes
2 answers
281 views

Are direct mechanisms always truthful?

I am very new to mechanism design so I am a bit lost among the concepts, even the most basic ones. One thing that is not clear to me is the concept of direct mechanism and its relationship with the ...
user avatar
  • 734
0 votes
0 answers
26 views

Synonyms for One-to-One Matching Mechanisms

I am trying to find a more elegant usage of wording for one-to-one matching and I am need of some thoughts from others. Bilateral matching? Any help would be respected.
user avatar