Conservative Rationalizability and The Second-Knowledge Mechanism
Author(s)
Chen, Jing; Micali, Silvio
DownloadMIT-CSAIL-TR-2010-060.pdf (340.2Kb)
Other Contributors
Theory of Computation
Advisor
Silvio Micali
Metadata
Show full item recordAbstract
In mechanism design, the traditional way of modeling the players' incomplete information about their opponents is "assuming a Bayesian." This assumption, however, is very strong and does not hold in many real applications. Accordingly, we put forward (1) a set-theoretic way to model the knowledge that a player might have about his opponents, and (2) a new class of mechanisms capable of leveraging such more conservative knowledge in a robust way. In auctions of a single good, we show that such a new mechanism can perfectly guarantee a revenue benchmark (always lying in between the second highest and the highest valuation) that no classical mechanism can even approximate in any robust way.
Date issued
2010-12-20Series/Report no.
MIT-CSAIL-TR-2010-060