Foundations of dominant-strategy mechanisms

Kim-Sau Chung, J.C. Ely

Research output: Contribution to journalArticlepeer-review

Abstract

Robert Wilson criticizes applied game theory's reliance on common-knowledge assumptions. In reaction to Wilson's critique, the recent literature of mechanism design has adopted the goal of finding detail-free mechanisms in order to eliminate this reliance. In practice this has meant restricting attention to simple mechanisms such as dominant-strategy mechanisms. However, there has been little theoretical foundation for this approach. In particular it is not clear the search for an optimal mechanism that does not rely on common-knowledge assumption would lead to simpler mechanisms rather than more complicated ones. This paper tries to fill the void. In the context of an expected revenue maximizing auctioneer, we investigate some foundations for using simple, dominant-strategy auctions.
Original languageEnglish
Pages (from-to)447-476
Number of pages30
JournalReview of Economic Studies
Volume74
Issue number2
DOIs
Publication statusPublished - 1 Apr 2007

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