Obvious Ex Post Equilibrium

Li, Shengwu

doi:10.1257/aer.p20171029

Cited by 9 publications

(49 citation statements)

References 5 publications

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“…Zhang and Levin (2017) provide decision-theoretic foundations for obvious dominance, and propose a weaker solution concept (equilibrium in partition dominant strategies). Li (2017) defines obvious ex post equilibrium for settings with interdependent values.…”

Section: Related Literaturementioning

confidence: 99%

Obviously Strategy-Proof Mechanisms

Li¹

2017

American Economic Review

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329

201

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A strategy is obviously dominant if, for any deviation, at any information set where both strategies first diverge, the best outcome under the deviation is no better than the worst outcome under the dominant strategy. A mechanism is obviously strategy-proof (OSP) if it has an equilibrium in obviously dominant strategies. This has a behavioral interpretation: A strategy is obviously dominant iff a cognitively limited agent can recognize it as weakly dominant. It also has a classical interpretation: A choice rule is OSP-implementable iff it can be carried out by a social planner under a particular regime of partial commitment.

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Section: Related Literaturementioning

confidence: 99%

Obviously Strategy-Proof Mechanisms

Li¹

2017

American Economic Review

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329

201

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“…• k = ∞: agents perceive all of their own information sets as simple, and all information sets of other agents as not simple-in other words, at each information set, an agent can plan the actions they will take at any future information set at which they may be called to play. This is equivalent to Li's (2017b) notion of obvious dominance; for this 5 Savage (1954) wrestles with whether decision-makers should be modeled as "look before you leap" (create a complete contingent plan for all possible future decisions one may face) or "you can cross that bridge when you come to it" (make choices as they arise). While standard strategic concepts of game theory formalize the former modeling option, our approach formalizes the latter.…”

Section: Introductionmentioning

confidence: 99%

“…7 We show that a strategic plan is simply dominant if and only if in every game an agent may confuse with the actual game being played, the strategic plan is weakly dominant in the standard sense (Theorem 3). Li (2017b) provides a related behavioral microfoundation for his obvious dominance, on which we build.…”

Section: Introductionmentioning

confidence: 99%

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A Theory of Simplicity in Games and Mechanism Design

Pycia

Troyan

2021

SSRN Journal

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We introduce a general class of simplicity standards that vary the foresight abilities required of agents in extensive-form games. Rather than planning for the entire future of a game, agents are presumed to be able to plan only for those histories they view as simple from their current perspective. Agents may update their so-called strategic plan as the game progresses, and, at any point, for the called-for action to be simply dominant, it must lead to unambiguously better outcomes, no matter what occurs at non-simple histories. We use our gradated approach to simplicity to provide characterizations of simple mechanisms. While more demanding simplicity standards may reduce the flexibility of the designer in some cases, this is not always true, and many well-known mechanisms are simple, including ascending auctions, posted prices, and serial dictatorship-style mechanisms. In particular, we explain the widespread popularity of the well-known Random Priority mechanism by characterizing it as the unique mechanism that is efficient, fair, and simple to play.

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“…Individual privacy can be valuable for intrinsic as well as instrumental reasons, and so is worth investigating (Izmalkov et al, 2005;Milgrom and Segal, 2017). Market mechanisms can often be complex; they must sometimes be made simple and transparent in order for people to participate as moral equals (Barthe et al, 2016;Li, 2016Li, , 2017. Participants should be able to answer questions such as, "What should I do to get what I want?"…”

Section: Informed Neutrality Between Reasonable Ethical Positionsmentioning

confidence: 99%

Ethics and market design

2017

Oxford Review of Economic Policy

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Introduction [.. . ] just as there is a chemical engineering literature (and not just literature about theoretical and laboratory chemistry) and a medical literature (and not just a biology literature), economists need to develop a scientific literature concerned with practical problems of design. (Roth and Peranson, 1999) It is, in fact, arguable that economics has had two rather different origins [.. . ] concerned respectively with 'ethics' on the one hand, and with what may be called 'engineering' on the other. (Sen, 1987) The word "market" often refers to a set of agents who seek to transact with each other. In this sense, the stock market consists of individuals and corporations seeking to buy and sell stocks, and the market for medical residents consists of doctors and hospitals. However, the word "market" can also refer to the rule-governed institution that facilitates these transactions. In this sense, a stock market is a platform, such as the New York Stock Exchange, that enables participants to find willing trading partners according to a set of common rules. 1 Similarly, the market for medical residents in the United States consists of a clearinghouse, the National Resident Matching Program, that matches doctors to hospitals using a centralized algorithm that accounts for the preferences of both sides (Roth and Peranson, 1999). An institution that facilitates transactions can be designed-the rules affect who trades, what is traded, and the terms of those trades. Market design takes an engineering approach to the problem: Plainly, in the course of studying market design we encounter ethical questions: Should public schools give priority to students living nearby, even if this entrenches existing economic inequality? Should wireless spectrum licenses have a limited lease or persist indefinitely, and does it matter what future generations would want? Should adults be permitted to trade kidneys for money? The central question of this paper is: How (if at all) should economic engineers think about ethics? If we are to evaluate a market design, we require normative criteria. Standard welfare analysis offers a preference utilitarian framework; only individual welfare matters, welfare is equivalent to preference satisfaction, and preference satisfaction should be maximized (in some aggregate sense). 2 However, it is not clear that preference utilitarianism is the correct ethical position, and many stakeholders and policymakers are not preference utilitarians. Moreover, insightful papers on market design often consider non-utilitarian criteria such as fairness and privacy-preservation, which need not be grounded narrowly in preference satisfaction. The first thesis of this paper is that the literature on market design does not, and should not, rely exclusively on preference utilitarianism to evaluate designs. If market design does not rely solely on preference utilitarianism, one is tempted to insist that market design should sort out its normative foundations before proceeding. We could seek an ethical positio...

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Obvious Ex Post Equilibrium

Cited by 9 publications

References 5 publications

Obviously Strategy-Proof Mechanisms

Obviously Strategy-Proof Mechanisms

A Theory of Simplicity in Games and Mechanism Design

Ethics and market design

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