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SMU SOE Seminar Series (November 7, 2024): Incentive Compatibility and Belief Restrictions

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TOPIC:

INCENTIVE COMPATIBILITY AND BELIEF RESTRICTIONS

ABSTRACT

We study a framework for robust mechanism design that can accommodate various degrees of robustness with respect to agents’ beliefs, and which includes both the belief-free and Bayesian settings as special cases. For general belief restrictions, we characterize the set of incentive compatible direct mechanisms in general environments with interdependent values. The necessary conditions that we identify, based on a first-order approach, provide a unified view of several known results, as well as novel ones, including a robust version of the revenue equivalence theorem that holds under a notion of generalized independence that also applies to non-Bayesian settings. Our main characterizations inform the design of belief-based terms, in pursuit of various objectives in mechanism design, including attaining incentive compatibility in environments that violate standard single-crossing and monotonicity conditions. We discuss several implications of these results. For instance, we show that, under weak conditions on the belief restrictions, any allocation rule can be implemented, but full rent extraction need not follow. Information rents are generally possible, and they decrease monotonically as the robustness requirements are weakened.

Keywords: Moment Conditions, Robust Mechanism Design, Incentive Compatibility, Interdependent Values, Belief Restrictions.

JEL: D62, D82, D83.

Click here to view the CV.
Click here to view the paper.

PRESENTER

Mariann Ollar
NYU Shanghai

RESEARCH FIELDS

Mechanism Design Microeconomics
Market Design
Game Theory 

DATE:

7 November 2024 (Thursday)

TIME:

4pm - 5.30pm

VENUE:

Meeting Room 5.1, Level 5
School of Economics
Singapore Management University
90 Stamford Road
Singapore 178903

 

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