Mechanism Design with Set-Theoretic Beliefs
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Micali_Mechanism Design with Set-Theoretic Beliefs.pdf
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456.85 KB
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Author(s)
Chen, Jing
Micali, Silvio
Date Issued
December 2011
Journal
IEEE 52nd Annual Symposium on Foundations of Computer Science 2011 (FOCS)
Publisher
Institute of Electrical and Electronics Engineers (IEEE)
Citation
Chen, Jing, and Silvio Micali. “Mechanism Design with Set-Theoretic Beliefs.” IEEE 52nd Annual Symposium on Foundations of Computer Science 2011 (FOCS). 87–96.
Version
Author's final manuscript
Abstract
In settings of incomplete information, we put forward (1) a very conservative -- indeed, purely set-theoretic -- model of the beliefs (including totally wrong ones) that each player may have about the payoff types of his opponents, and (2) a new and robust solution concept, based on mutual belief of rationality, capable of leveraging such conservative beliefs. We exemplify the applicability of our new approach for single-good auctions, by showing that, under our solution concept, a normal-form, simple, and deterministic mechanism guarantees -- up to an arbitrarily small, additive constant -- a revenue benchmark that is always greater than or equal to the second-highest valuation, and sometimes much greater. By contrast, we also prove that the same benchmark cannot even be approximated within any positive factor, under classical solution concepts.
MIT Department
Massachusetts Institute of Technology. Computer Science and Artificial Intelligence Laboratory
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1109/focs.2011.11
