Foundations of dominant-strategy mechanisms

Kim-Sau Chung, J.C. Ely

    Research output: Contribution to journalJournal articlepeer-review

    82 Citations (Scopus)

    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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