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.

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What types of 'market mechanisms' are said to exist besides auctions?

The book Understanding Auctions states: The term auction covers a wide range of market mechanisms that are used to exchange products and services by determining who receives an item and how much is ...
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A manifold of agents?

In contract theory and mechanism design, if the agents have one-dimensional characteristics, then they are usually considered as a contiuum on $\mathbb R$; if they have n-dimensional type, then they ...
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VCG mechanism with a minimum payment threshold

Suppose that we want to find a socially-optimal allocation in the following setting: There are $n$ firms and $m$ workers. Each firm $i$ needs one worker and has value $v_i$ for having a worker (any ...
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1answer
135 views

Does the VCG algorithm work for any bundle valuation function?

Assume we have $n$ buyers of $|M|=m$ items in a combinatorial auction. So as we know, we can use the Vickrey-Clarke-Groves (VCG) algorithm to allocate bundles of items to buyers as best as possible. ...
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Incentive compatibility

I have a set of objects $A=\{a_1,a_2,a_3,\cdots,a_m\}$ and one player, who proposes a vector of valuations $t=(t_1~t_2~t_3~\cdots~t_m)$ for the $m$ objects. $T$ is the set of all such valuation types. ...
5
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375 views

Checking incentive compatibility of a mechanism

I was thrilled at seeing an interesting bidding system in an academic institutions. This bidding is for registration of courses. Each student is allocated some points based on her grade point(GPA). So,...
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Allocation of an Indivisible Good

Two kids at school are arguing over who owns a cool video game cartridge, and the schoolteacher, a ruthlessly practical social planner who knows that kids can only enforce so much AND that the game is ...
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2answers
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Code finding all stable matchings in one-to-one problem

Do you know of any publicly available code in python or R (or any other free high level language) that returns all the stable matchings for any one-to-one matching problem? Note: This is related but ...
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2answers
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What is the difference between contract theory and mechanism design?

Can someone explain the difference between contract theory and mechanism design?
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Taking a mechanism as given, what goal functions can we implement?

Let $\theta_i$ be $i$'s private information about the state of the world, $\theta \in \Theta$, where $\theta = \times_i \theta_i$. Each agent reports $\hat{\theta_i}$ to a social planner, so that $\...
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Business agreement design - is there science behind this?

I am working on schemas how advertisement space is sold to the ad agencies, ad networks and individual customers. There are lot of questions involved how to design the business agreement. E.g. one can ...
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2answers
929 views

Computing Boston and TTC in Python

This is somewhat of a follow up question to Available code for computing solutions to matching algorithms?. In the above question, I got great answers, but all of them were for ...
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1answer
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Is there an algorithm to find as many NE as possible in this generalized second price auction?

Suppose three advertisers, I, II, III are participating in an auction for three positions for online advertising, top, middle and bottom. Assume that click per second for a position is not affected ...
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Bidder Count Impact on Uniform Price Economics

Say we have an uniform price auction where 1 really rare stamp is for sale. Only 5 randomly selected stamp collectors are invited to bid and the stamp ends up selling for 1 million dollars. Now ...
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2answers
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Derivation on p.99 of Salanie, The Economics of Taxation (2nd edition)

Starting on p. 98 of Salanie's "The Economic of Taxation" (2nd edition), it explains To probe it more rigorously, let us define the utility of taxpayer $w$ when he claims to have productivity $w'$: ...
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1answer
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How does Google price the items on Google Play?

I am a fledgling computer science researcher working in intersection of economics and computation. Please excuse me if this question seems out of place to the administrator. I am currently studying ...
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2answers
50 views

Mechanism design when the set of feasible decisions depends on types

Q : Can the tools of mechanism design be applied when the set of feasible decisions $D$ depends on the types $\theta$? For example, when $d \in D$ represents the total funding allocated toward some ...
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25k views

What is the definition of "First Best", "Second Best", etc. in contract theory?

What is the definition of "First Best", "Second Best", etc. in contract theory? Especially, what is the difference between "First Best" in contract theory and "ex-post efficient" in mechanism design?
6
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1answer
71 views

Any study on performance gap between optimal mechanism and linear mechanism?

In mechanism design, the optimal mechanism is usually not linear in the agent's type. However, linear mechanisms are easy for implementation. Are there any studies on the performance comparison ...
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Available code for computing solutions to matching algorithms?

The question of designing matching procedure (between high-schools and students, med intern and hospitals, kidney donors and receivers,...) has been widely studied by economists and vastly contributed ...

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