As-if Dominant Strategy Mechanisms
Abstr act:
We show that achieving dominant str ategy incentive compatibility often requires a designer to choose a mechani sm of severely limited transparency. To allow for greater transparency whil e maintaining straightforward strategic incentives we propose as-if dominan t strategy mechanisms, defined as follows. As long as all agents beli eve others play as if they were in a static mechanism: (i) Each of them has a strategy that is optimal no matter what others do, and (ii) rationality alone is enough to ensure that they always best respond to each other. We s how that the auction format used by prominent online platforms---such as eB ay---achieves maximal transparency within the set of as-if dominant strateg y second-price auctions with asynchronous bids. Furthermore, we provide a u nified explanation for experimental findings in a range of settings, from m atching to multi-unit auctions environments. Finally, we show that mechanis ms satisfying a refinement of as-if dominance are also solvable by iterated elimination of weakly dominated strategies.
DTSTAMP:20260522T095436Z DTSTART:20240620T130000Z DTEND:20240620T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR