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Strategically Simple Mechanisms

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Abstract

We define and investigate a property of mechanisms that we call "strategic simplicity," and that is meant to capture the idea that, in strategically simple mechanisms, strategic choices require limited strategic sophistication. We define a mechanism to be strategically simple if choices can be based on first-order beliefs about the other agents' preferences and first-order certainty about the other agents' rationality alone, and there is no need for agents to form higher-order beliefs, because such beliefs are irrelevant to the optimal strategies. All dominant strategy mechanisms are strategically simple. But many more mechanisms are strategically simple. In particular, strategically simple mechanisms may be more flexible than dominant strategy mechanisms in the bilateral trade problem and the voting problem.

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  • Tilman Borgers & Jiangtao Li, 2018. "Strategically Simple Mechanisms," Cowles Foundation Discussion Papers 2148, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2148
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    Cited by:

    1. Margarita Kirneva & Matias Nunez, 2021. "Voting by Simultaneous Vetoes," Working Papers 2021-08, Center for Research in Economics and Statistics.
    2. Alexander L. Brown & Daniel G. Stephenson & Rodrigo A. Velez, 2024. "Testing the simplicity of strategy-proof mechanisms," Papers 2404.11883, arXiv.org.
    3. Yang, Chih-Chun, 2023. "Strategically simple implementation in the bilateral trade problem," Economics Letters, Elsevier, vol. 233(C).
    4. Jon X. Eguia & Dimitrios Xefteris, 2021. "Implementation by Vote-Buying Mechanisms," American Economic Review, American Economic Association, vol. 111(9), pages 2811-2828, September.
    5. Hakimov, Rustamdjan & Kübler, Dorothea, 2021. "Experiments on centralized school choice and college admissions: a survey," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(2), pages 434-488.
    6. Crawford, Vincent P., 2021. "Efficient mechanisms for level-k bilateral trading," Games and Economic Behavior, Elsevier, vol. 127(C), pages 80-101.
    7. Kneeland, Terri, 2022. "Mechanism design with level-k types: Theory and an application to bilateral trade," Journal of Economic Theory, Elsevier, vol. 201(C).
    8. Itai Arieli & Yakov Babichenko & Fedor Sandomirskiy, 2023. "Persuasion as Transportation," Papers 2307.07672, arXiv.org.
    9. Mukherjee, Saptarshi & Muto, Nozomu & Sen, Arunava, 2024. "Implementation in undominated strategies with applications to auction design, public good provision and matching," Journal of Economic Theory, Elsevier, vol. 216(C).
    10. Marek Pycia & Peter Troyan, 2023. "A Theory of Simplicity in Games and Mechanism Design," Econometrica, Econometric Society, vol. 91(4), pages 1495-1526, July.
    11. Hagen, Martin & Hernando-Veciana, Ángel, 2021. "Multidimensional bargaining and posted prices," Journal of Economic Theory, Elsevier, vol. 196(C).
    12. Joseph Feffer, 2024. "Scoring Auctions with Coarse Beliefs," Papers 2410.06150, arXiv.org.
    13. Bnaya Dreyfuss & Ofer Glicksohn & Ori Heffetz & Assaf Romm, 2022. "Deferred Acceptance with News Utility," NBER Working Papers 30635, National Bureau of Economic Research, Inc.
    14. Giertz, Jan-Paul & Stracke, Stefan, 2019. "Strategische Personalplanung: Praxiswissen Betriebsvereinbarungen," Study / edition der Hans-Böckler-Stiftung, Hans-Böckler-Stiftung, Düsseldorf, volume 127, number 433, March.
    15. He, Wei & Li, Jiangtao, 2022. "Correlation-robust auction design," Journal of Economic Theory, Elsevier, vol. 200(C).
    16. Ritesh Jain & Michele Lombardi & Antonio Penta, 2024. "Strategically Robust Implementation," Working Papers 1461, Barcelona School of Economics.
    17. Mehmet Barlo & Nuh Aygün Dalkıran, 2022. "Computational implementation," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 605-633, December.
    18. Michael Müller, 2024. "Belief-independence and (robust) strategy-proofness," Theory and Decision, Springer, vol. 96(3), pages 443-461, May.

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    Keywords

    Mechanism design; Complexity;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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