Menu-dependent preferences and revelation principle

Saran, René

doi:10.1016/j.jet.2011.03.009

Cited by 28 publications

(9 citation statements)

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“…As far as I know, the topic of implementation in dominant strategies has never been discussed in the past in the absence of IIA. A few other relevant references include Eliaz (2002), who studies full implementation in Nash equilibrium that is robust to the presence of any number of "faulty" individuals below a fixed threshold, where faulty individuals may behave in any possible way; Saran (2011), who studies under which conditions over individual choice correspondences over Savage acts does the revelation principle hold for weak Nash implementation with incomplete information; and Glazer and Rubinstein (2011), who introduce a mechanism design model in which both the content and framing of the mechanism affect the agent's ability to manipulate the information he provides.…”

Section: Related Literaturementioning

confidence: 99%

Behavioral Implementation

Clippel

2014

American Economic Review

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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. Abstract Implementation theory assumes that participants' choices are rational, in the sense of being derived from the maximization of a contextindependent preference. The paper investigates implementation under complete information when the mechanism designer is aware that individuals suffer from cognitive biases that lead to violations of IIA, or cannot exclude the possibility of such "irrational" behavior. Terms of use: Documents in IntroductionImplementation under complete information is a classic problem in mechanism design. The designer would like to implement a rule that selects acceptable outcomes as a function of a problem's characteristics. Unfortunately, while commonly known among participants, these characteristics are unknown to him. He must thus rely on their reports to tailor his selection of outcomes. Taking into account the participants' incentives to misrepresent their information, what are the rules that the designer can effectively implement?Characteristics encode participants' preferences in standard implementation models. However, there is ample evidence in marketing, psychology and behavioral economics that people's choices need not be consistent with the maximization of a preference relation. Classic examples, which have played * The paper benefited from insightful conversations with Kfir Eliaz, Eric Maskin, Kareen Rozen, and Roberto Serrano. I also wish to thank Chris Chambers, George Mailath, Rene Saran, and Rajiv Vohra for useful comments. Financial support from the Deutsche Bank through the Institute for Advanced Study is gratefully acknowledged.

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Section: Related Literaturementioning

confidence: 99%

Behavioral Implementation

Clippel

2014

American Economic Review

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“…Best responses then determine behavior by induction on the individuals' depth of reasoning, starting with an "anchor" that fixes the behavior at level-0. This anchor captures people's beliefs about how others would 1 For instance, Eliaz (2002) allows for "faulty" agents, Serrano (2011, 2012) allow agents to learn in the direction of (unperturbed, perturbed) better replies, Saran (2011) studies the revelation principle under conditions over individual choice correspondences over Savage acts, Renou and Schlag (2011) consider implementation with ǫ-minmax regret to model individuals who have doubts about others' rationality, Glazer and Rubinstein (2012) allow the content and framing of the mechanism to play a role, and de Clippel (2014) relaxes preference maximization. Independently of the present paper, Crawford (2016) and Kneeland (2017) study some implications of level-k theories.…”

Section: Introductionmentioning

confidence: 99%

Level-$k$ Mechanism Design

Clippel

Saran

Serrano

2018

The Review of Economic Studies

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Models of choice where agents see others as less sophisticated than themselves have significantly different, sometimes more accurate, predictions in games than does Nash equilibrium. When it comes to the maximal set of functions that are implementable in mechanism design, however, they turn out to have similar implications. Focusing on singlevalued rules, we discuss the role and implications of different behavioral anchors (arbitrary level-0 play), and prove a level-k revelation principle. If a function is level-k implementable given any level-0 play, it must obey a slight weakening of standard strict incentive constraints. Further, the same condition is also sufficient for level-k implementability, although the role of specific level-0 anchors is more controversial for the sufficiency argument. Nonetheless, our results provide tight characterizations of level-k implementable functions under a variety of level-0 play, including truthful, uniform, and atomless anchors.

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“…Augmented revelation mechanisms play a role also in this context, due to the possibility of menu-dependence. Saran (2011), in contrast, provides conditions for the revelation principle to hold in a Bayesian framework even in such cases.…”

Section: Literaturementioning

confidence: 99%

Mechanism Design and Intentions

Bierbrauer

Netzer

2016

SSRN Journal

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We introduce intention-based social preferences into a mechanism design framework with independent private values and quasilinear payoffs. For the case where the designer has no information about the intensity of social preferences, we provide conditions under which mechanisms which have been designed under the assumption that agents are selfish can still be implemented. For the case where precise information about social preferences is available, we show that any tension between efficiency, incentive-compatibility, and voluntary participation may disappear. Impossibility results such as the one by Myerson and Satterthwaite (1983) are then turned into possibility results. We also provide a systematic account of the welfare implications of kindness sensations.

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Menu-dependent preferences and revelation principle

Cited by 28 publications

References 10 publications

Behavioral Implementation

Behavioral Implementation

Level-$k$ Mechanism Design

Mechanism Design and Intentions

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