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A Theory of Simplicity in Games and Mechanism Design

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  • Marek Pycia
  • Peter Troyan

Abstract

We study extensive‐form games and mechanisms allowing agents that plan for only a subset of future decisions they may be called to make (the planning horizon). Agents may update their so‐called strategic plan as the game progresses and new decision points enter their planning horizon. We introduce a family of simplicity standards which require that the prescribed action leads to unambiguously better outcomes, no matter what happens outside the planning horizon. We employ these standards to explore the trade‐off between simplicity and other objectives, to characterize simple mechanisms in a wide range of economic environments, and to delineate the simplicity of common mechanisms such as posted prices and ascending auctions, with the former being simpler than the latter.

Suggested Citation

  • Marek Pycia & Peter Troyan, 2023. "A Theory of Simplicity in Games and Mechanism Design," Econometrica, Econometric Society, vol. 91(4), pages 1495-1526, July.
    • Handle: RePEc:wly:emetrp:v:91:y:2023:i:4:p:1495-1526
    DOI: 10.3982/ECTA16310
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    1. Pablo R. Arribillaga & Jordi Massó & Alejandro Neme, 2023. "Obvious Strategy-proofness with Respect to a Partition," Working Papers 293, Red Nacional de Investigadores en Economía (RedNIE).

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