Mechanism Design and Intentions

Bierbrauer, Felix; Netzer, Nick

doi:10.2139/ssrn.2021860

Cited by 10 publications

(12 citation statements)

References 128 publications

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“…They find that when agents "become infinitely risk-averse" an ex post efficient outcome can be achieved. Bierbrauer and Netzer (2016) modify the standard mechanism design framework by introducing intention-based social preferences. They study the implementability of incentivecompatible social choice functions and how it depends on the designer's information on the degree of agents' reciprocity.…”

Section: Related Literaturementioning

confidence: 99%

Bilateral Trade with Loss-Averse Agents

Benkert

2015

SSRN Journal

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We study the bilateral trade problem put forward by Myerson and Satterthwaite (1983) under the assumption that agents are loss-averse, using the model developed by Kőszegi and Rabin (2006, 2007). We show that the endowment effect increases the sellers information rent, and that the attachment effect reduces the buyer's information rent. Further, depending on the distribution of types, loss-aversion can reduce the severity of the impossibility problem. However, the result cannot be reversed. Turning to the design of optimal mechanisms, we show that in both revenue and welfare maximizing mechanisms the designer optimally provides the agents with full insurance in the money dimension and with partial insurance in the trade dimension. In fact, when the stakes are large, loss-aversion can eliminate trade altogether. We show that all results display robustness to the exact specification of the reference point and provide some results on general mechanism design problems.

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Section: Related Literaturementioning

confidence: 99%

Bilateral Trade with Loss-Averse Agents

Benkert

2015

SSRN Journal

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“…Bierbrauer and Netzer (2012) explore the implications of a specic model of social preferences, namely the one by Rabin (1993), for a Bayesian mechanism design problem -as opposed 2 Related impossibility results hold for problems of public-goods provision, see Güth and Hellwig (1986) and Mailath and Postlewaite (1990).…”

Section: Related Literaturementioning

confidence: 99%

“…Since we work with ex post as opposed to Bayesian incentive and participation constraints, the equivalence result in Bierbrauer and Netzer (2012) no longer holds, i.e. externality-freeness becomes a substantive constraint.…”

Section: Related Literaturementioning

confidence: 99%

Robust mechanism design and social preferences

Bierbrauer

Ockenfels

Pollak

et al. 2017

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Robust Mechanism Design and Social Preferences AbstractWe study a classic mechanism design problem: How to organize trade between two privately informed parties. We characterize an optimal mechanism under selfish preferences and present experimental evidence that, under such a mechanism, a non-negligible fraction of individuals deviates from the intended behavior. We show that this can be explained by models of social preferences and introduce the notion of a social-preference-robust mechanism. We characterize an optimal mechanism in this class and present experimental evidence that it successfully controls behavior. We finally show that this mechanism is more profitable only if deviations from selfish behavior are sufficiently frequent.JEL-Code: C920, D030, D820.

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“…They are informed that the bids of the computer are bids that human participants made in an earlier identical experiment but with two human bidders. In fact, each participant 6 Bartling and Netzer (2016) rely on the mechanism design approach by Bierbrauer and Netzer (2016) to derive an externality-robust version of the SPA and compare its performance to the standard SPA in a laboratory experiment. They conclude that externality-robustness is of equal importance as dominant-strategy robustness.…”

Section: Experimental Designmentioning

confidence: 99%

Does the Absence of Human Sellers Bias Bidding Behavior in Auction Experiments?

2016

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This paper studies the impact of the presence of human subjects in the role of a seller on bidding in experimental second-price auctions. Overbidding is a robust finding in secondprice auctions, and spite among bidders has been advanced as an explanation. If spite extends to the seller, then the absence of human sellers who receive the auction revenue may bias upwards the bidding behavior in existing experimental auctions. We derive the equilibrium bidding function in a model where bidders have preferences regarding both, the payoffs of other bidders and the seller's revenue. Overbidding is optimal when buyers are spiteful only towards other buyers. However, optimal bids are lower and potentially even truthful when spite extends to the seller. We experimentally test the model predictions by exogenously varying the presence of human subjects in the roles of the seller and competing bidders. We do not detect a systematic effect of the presence of a human seller on overbidding. We conclude that overbidding is not an artefact of the standard experimental implementation of second-price auctions in which human sellers are absent.

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Mechanism Design and Intentions

Cited by 10 publications

References 128 publications

Bilateral Trade with Loss-Averse Agents

Bilateral Trade with Loss-Averse Agents

Robust mechanism design and social preferences

Does the Absence of Human Sellers Bias Bidding Behavior in Auction Experiments?

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