A central idea of this paper is that the problem of designing ex post incentive comaptible mechanisms. Dynamic mechanism design ruggiero cavallo university of pennsylvania department of computer and. A central idea of this paper is that the problem of designing ex post incentive comaptible mechanisms for a group of agents can be decomposed 3. This loss is evident in the computer science theory of ic mechanism design, which is described most. The impossibility result by jehiel and moldovanu says that in a setting with interdependent valuations, any efficient and expost incentive compatible mechanism must be a constant mechanism. First, our theorem on the equivalence between ex post and interim incentive compatibility under knightian uncertainty is related to the recent body of work on.
These conditions include standard regularity assumptions often invoked in mechanism design, such as a continuum of types and smoothness of the utility function. Bayesian incentive compatibility is a strict relaxation of expost in the sense that any mechanism that is expost incentive compatible is also bayesian incentive compatible. When complete rankings cannot be achieved, ex post incentive compatible and e cient mechanisms arise when social networks are bipartite or composed of triangles. Lavi and swamy 9 consider ic mechanisms for multiparameter packing problems and give a technique for. We first show that similar foundation results for ex post mechanisms hold true even with interdependent values if the interdependence is only cardinal. Expost incentive compatible mechanism design citeseerx. Distributionally robust mechanism design optimization online. Epic is a relatively recent idea in the literature, but its based on the idea of dominant strategies mechanism, which have been used for many years in work on auctions and public choice mechanisms. A protocol is credible if running the mechanism is incentive compatible for the auctioneer.
By deriving the support function for the set of feasible interim values we extend the well. Efficient mechanisms with dynamic populations and dynamic. In this paper, we have considered mechanisms for interdependent valuation settings. Like above, the answer to these questions depends on types of cost functions we are considering. Credible mechanism design mohammad akbarpoury shengwu liz november 18, 2017. Ex post incentive compatibility, or epic for short, means that each player. If workers and rms are each symmetric ex ante, we construct a dominant strategy incentive compatible and ex ante stable mechanism, which also balances the budget on average theorem 5. There have been a few reductions from ex post incentive compatible mechanism design to algorithm design for special classes of algorithms. Ccbs algorithm produces an ex post monotone allocation rule and thus can be transformed into an ex post incentive compatible and ex post individually rational mechanism that learns the qualities of the workers and guarantees a given target accuracy level in a cost optimal way. Bayesian incentive compatibility is a strict relaxation of ex post in the sense that any mechanism that is ex post incentive compatible is also bayesian incentive compatible. We characterize the windmill network as the sparsest social network for which the planner can construct a complete ranking.
Such mechanisms are called bayesian incentive compatible bic. Optimal dynamic mechanism design and the virtual pivot mechanism sham m. This is a way to think about partial commitment power for any extensiveform mechanism. I also show that in the types of models typically used to study private. If there exists an ex post incentive compatible mechanism, t which is not necessarily individually rational or budget feasible, the next theorem gives a necessary and sufficient condition. Some definitions and results mechanism design is the science of designing rules of a game to achieve a specific outcome, even though each participant may be selfinterested. It is the combination of informational externalities i. This follows from our main result and the standard mechanism design equivalence of ex post incentive compatibility with ex post monotonicity and ex post envelope condition. In 4, we argued our main result section for generalized bilateral trading model. Ccbs algorithm produces an expost monotone allocation rule and thus can be transformed into an expost incentive compatible and expost individually rational mechanism that learns the qualities of the workers and guarantees a given target accuracy level in a cost optimal way. Optimal dynamic mechanism design and the virtualpivot. Ascending and ex post incentive compatible mechanisms tim roughgardeny january 8, 2014 1 introduction these twenty lectures cover advanced topics in mechanism design. Mechanism design with multidimensional, continuous types and.
In privatevalue auction environments, chung and ely 2007 establish maxmin and bayesian foundations for dominantstrategy mechanisms. We characterize ex post incentive compatible public decision rules, and apply this characterization to i bilateral trade and ii public good provision. Moreover, any agent can still block the mechanism ex post by quitting. This follows from our main result and the standard mechanism design equivalence of expost incentive compatibility with expost monotonicity and expost envelope condition. However, robustness comes at a cost to the players. We characterize ex post incentive compatible public decision rules, and apply this characterization to i bilateral trade and ii public good. Of course the vcg mechanism reduces the ic mechanism design problem to exact algorithm design, 4, 7. Mezzetti circumvents this problem by designing a two stage mechanism where the decision of allocation and payment are split over the two stages. Robust mechanism design of exchange pavel andreyanov and tomasz sadzik, ucla july 25th, 2017 abstract we provide a robust priorfree strategic foundation for the walrasian equilibrium. The recent literature on mechanism design provides a series of studies on the robustness of. The classic mechanism by mezzetti is expost incentive compatible for such settings, but in the second stage of valuation reporting is truthful in the weakest possible sense, as payments to agents are independent of their own reported valuations. In addition to incentive compatibility, we are interested in mechanisms that are individually rational, i.
Ex post renegotiation takes place after the mechanism is played and involves a change of the outcome or recommendation proposed by the mechanism. As such, it is a dynamic groves mechanism and withinperiod ex post incentive compatible. Pdf an introduction to the theory of mechanism design. A property of a direct mechanism requiring that truth be a. The revelation principle implies that, for our new mechanism design goal, we can restrict our search to directrevelation mechanisms in which truthful reporting is a bne. An ex post incentive compatible mechanism is constructed in a model where a single indivisible object is allocated among several buyers with multidimensional information and interdependent values. Organization in section 2 we illustrate our approach via an example of a singleunit auction with two ex ante. Ambiguous beliefs and mechanism design berkeleyhaas.
The mechanism design literature has investigated the implementation question for a variety of solution concepts. Ex post renegotiationproof mechanism design zvika neemany gregory pavlovz february 4, 2012 abstract we study a mechanism design problem under the assumption that ex post renegotiation cannot be prevented. To each mechanism and equilibrium one can associate a direct mechanism that is incentive compatible. Hence, the dynamic mechanism design problem reduces. I would like to thank the coeditor, vijay krishna, and two anonymous referees.
In a landmark paper in the mechanism design literature, cremer and mclean 1985 cm for short show that when a. Robust mechanism design setephen morriseco512 lectures summary by n. Robust automated mechanism design1 michael albert, university of texas at austin vincent conitzer, duke university peter stone, university of texas at austin we introduce a new class of mechanisms, robust mechanisms, that is an intermediary between ex post mechanisms and bayesian mechanisms. Robust mechanism design of exchange chicago school of. Much work in mechanism design assumes smaller type spaces than the universal. The classic mechanism by mezzetti is ex post incentive compatible for such settings, but in the second stage of valuation reporting is truthful in the weakest possible sense, as payments to agents are independent of their own reported valuations. This is done by setting up a structure in which each player has an incentive to behave as the designer intends. Withinperiod ex post incentive compatibility if all other agents report types truthfully in. Expost incentive compatible mechanism design, discussion papers 39. Theorem 4 revelation priniciple a choice rule is partially implementable by any mechanism, if and only if it is incentive compatible. Robust mechanism design theorem 2005 f is interim incentive compatible on every type space t if and only if f is ex post incentive compatible. Goeree and alexey kushnir november 21, 20 abstract we develop a novel geometric approach to mechanism design using an important result in convex analysis. Citeseerx document details isaac councill, lee giles, pradeep teregowda. We investigate what kind of equilibria of which mechanisms are ex post.
Sequential mechanisms with expost participation guarantees. The dynamic cost of ex post incentive compatibility in. We present the virtualpivot mechanism, which is optimal in a large class of environments that satisfy a separability condition. As such, we believe that our paper complements the existing studies of double.
Mechanism design with multidimensional, continuous types. Bodohcreeda,1 a462 uris hall cornell university ithaca, new york 14853. Incentive compatible market design with applications. A strict expost incentive compatible mechanism for. Incentive compatible market design with applications, international. An incentive compatible multiarmedbandit crowdsourcing. Our main theorem provides conditions under which optimal incentive compatibility is equivalent to ex post incentive compatibility. It is the combination of informational ex ternalities i. The impossibility result by jehiel and moldovanu says that in a setting with interdependent valuations, any efficient and ex post incentive compatible mechanism must be a constant mechanism. A mechanism x,t is expost individually rational if for. The main limitation is that it provides only ex ante participation, while the dynamic vcg mechanism developed in bergemann and v.
This is an additional desirable property of mechanisms since it allows agents to optimize without forming any beliefs about. Our motivation is to design a mechanism that is ex post incentive compatible, which makes truthtelling a best response irrespective of the participants beliefs about others signals. The limits of expost implementation philippe jehiel, moritz meyertervehn. In the original paper and subsequent literature, the focus has been on expost incentive compatible or ic mechanisms, where truth. Incentive compatible market design with an application to. Y is ex post incentive compatible if, for all i and 2.
An introduction to the theory of mechanism design provides rigorous but accessible explanations of classic results in the theory of mechanism design, such as myersons theorem on expected revenue maximizing auctions, myerson and satterthwaites theorem on the impossibility of ex post efficient bilateral trade with asymmetric information, and. Remark for a given qepmon, the importance of this result isnotto say that it. On the foundations of ex post incentive compatible mechanisms. Aug 27, 2014 this paper is a part of my dissertation submitted to stanford university, and it has been circulated as a part of incentive compatible market design with an application to matching with wages. We consider here incentive compatible mechanisms and assume truthful reports by the other players. This includes, for example, the onedimensional environments of dasgupta and maskin 2000 and. Ex post incentive compatible mechanism design, discussion papers 39, northwestern university, center for mathematical studies in economics and management science.
Delegation principle for multiagency games under ex post equilibrium, caepr working papers 2012008, center for. Dominant strategy incentive compatibility states that each agent prefers truthtelling regardless of what other agents report. When complete rankings cannot be achieved, ex post incentivecompatible and e cient mechanisms arise when social networks are bipartite or composed of triangles. In other words, the organizer of the auction acts as the. Optimal dynamic mechanism design and the virtual pivot. They assume familiarity with some of the material covered in the instructors cs364a course speci cally, lectures 24 and 79. Antic incomplete information environments can be modeled as bayesian games where there is common knowledge of each players type space and each types beliefs over types of other players. The expressions of incentive compatible and individual rational are slightly different. For instance, if the auctioneer wants revenue, then the secondprice auction is not. The ex ante incentive compatible core of the assignment game. Robust automated mechanism design1 michael albert, university of texas at austin vincent conitzer, duke university peter stone, university of texas at austin we introduce a new class of mechanisms, robust mechanisms, that is an intermediary between expost mech. The theory of mechanism design takes a systematic look at the design of institutions. When alternatives are ordered on a line, these are. Kakade ilan lobely hamid nazerzadehzx march 25, 2011.
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