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Mechanism Design and Robust Control

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  • Javier Rivas Ruiz

    (University of Bath)

Abstract

In this paper we introduce robust control methods in mechanism design problems. We assume that in the presence of an incentive compatible mechanism, players behave as if their types were in a δ -neighborhood of their true types. The designer’s problem is to set up a mechanism that implements a given social choice function taking these δ -perturbations into account. In our results we characterize the social choice functions that are robust to the δ -perturbations, in the sense that the designers’ loss is at most of order δ k for a certain k . A notable finding is that in quasi-linear utilitarian environments the designer’s loss is of order of δ 2 .

Suggested Citation

  • Javier Rivas Ruiz, 2014. "Mechanism Design and Robust Control," Department of Economics Working Papers 22/14, University of Bath, Department of Economics.
    • Handle: RePEc:eid:wpaper:39842
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    References listed on IDEAS

    as
    1. Moritz Meyer-ter-Vehn & Stephen Morris, 2012. "The Robustness of Robust Implementation," World Scientific Book Chapters, in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 10, pages 357-373, World Scientific Publishing Co. Pte. Ltd..
    2. , A., 2010. "Supermodular mechanism design," Theoretical Economics, Econometric Society, vol. 5(3), September.
    3. Cabrales, Antonio, 1999. "Adaptive Dynamics and the Implementation Problem with Complete Information," Journal of Economic Theory, Elsevier, vol. 86(2), pages 159-184, June.
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