Abstract
We consider a setting in which additional parameters that determine preference characteristics are unknown. The mechanism designer specifies a model for possible type distributions and utility functions. We consider mechanisms that are uniformly incentive compatible with respect to a domain of possible utility functions. We identify conditions on the utility domain in which mechanisms always prescribe the same distribution over outcomes. These conditions have implications for optimal mechanism design with max-min objectives, and may be interpreted as capturing different forms of preference heterogeneity.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Banerjee AV, Chassang S, Montero S, Snowberg E (2020) A theory of experimenters: robustness, randomization, and balance. Am Econ Rev 110(4):1206–30
Bergemann D, Morris S (2005) Robust mechanism design. Econometrica 73(6):1771–1813
Börgers T (2015) An introduction to the theory of mechanism design. Oxford University Press, Oxford
Brooks B, Songzi D (2021) Optimal auction design with common values: an informationally robust approach. Econometrica 89(3):1313–1360
Carroll G (2015) Robustness and linear contracts. Am Econ Rev 105(2):536–63
Chung K-S, Ely JC (2007) Foundations of dominant-strategy mechanisms. Rev Econ Stud 74(2):447–476
Clarke EH (1971) Multipart pricing of public goods. Publ Choice 11:17–33
Fudenberg D, Romanyuk G, Strack P (2017) Active learning with a misspecified prior. Theor Econ 12(3):1155–1189
Gale D, Shapley LS (1962) College admissions and the stability of marriage. Am Math Mon 69(1):9–15
Gibbard A (1973) Manipulation of voting schemes: a general result. Econometrica J Econ Soc 41(4):587–601
Hu F, Immorlica N, Lucier B, Strack P (2015) Randomization beats second price as a prior-independent auction. In: Proceedings of the sixteenth ACM conference on economics and computation, pp 323–323
Leonid H (1960) Optimality and informational efficiency in resource allocation processes. Mathematical methods in the social sciences. Stanford University Press
Madarász K, Prat A (2017) Sellers with misspecified models. Rev Econ Stud 84(2):790–815
Maskin E (1999) Nash equilibrium and welfare optimality. Rev Econ Stud 66(1):23–38
Myerson RB (1981) Optimal auction design. Math Oper Res 6(1):58–73
Myerson RB (2013) Game theory. Harvard University Press, Oxford
Myerson RB, Satterthwaite MA (1983) Efficient mechanisms for bilateral trading. J Econ Theory 29(2):265–281
Nambiar M, Simchi-Levi D, Wang H (2019) Dynamic learning and pricing with model misspecification. Manag Sci 65(11):4980–5000
Roth AE, Sotomayor M (1992) Two-sided matching. Handb Game Theory Econ Appl 1:485–541
Theodore G (1973) Incentives in teams. Econometrica J Econ Soc 41(4):617–631
Tommy C-CT, Sérgio Ribeiro da Costa W (1988) The Bayesian foundations of solution concepts of games. J Econ Theory 45(2):370–391
Vickrey W (1961) Counterspeculation, auctions, and competitive sealed tenders. J Finance 16(1):8–37
Weinstein J, Yildiz M (2007) A structure theorem for rationalizability with application to robust predictions of refinements. Econometrica 75(2):365–400
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Basu, P. Mechanism design with model specification. Soc Choice Welf 61, 263–276 (2023). https://doi.org/10.1007/s00355-023-01449-3
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00355-023-01449-3