Knightian Analysis of the Vickrey Mechanism
Author(s)Chiesa, Alessandro; Micali, Silvio; Zhu, Zeyuan Allen
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We analyze the Vickrey mechanism for auctions of multiple identical goods when the players have both Knightian uncertainty over their own valuations and incomplete preferences. In this model, the Vickrey mechanism is no longer dominant‐strategy, and we prove that all dominant‐strategy mechanisms are inadequate. However, we also prove that, in undominated strategies, the social welfare produced by the Vickrey mechanism in the worst case is not only very good, but also essentially optimal.
DepartmentMassachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
The Econometric Society
Chiesa, Alessandro, Silvio Micali, and Zeyuan Allen Zhu. “Knightian Analysis of the Vickrey Mechanism.” Econometrica 83, no. 5 (2015): 1727–1754.
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