Mechanism design with set-theoretic beliefs

In settings of incomplete information, we put forward: (1) a very conservative - indeed, purely set-theoretic- model of the beliefs (including totally wrong ones) that each player may have about the payoff types of his opponents, and (2) a new and robust solution concept, based on mutual belief of rationality, capable of leveraging such conservative beliefs. We exemplify the applicability of our new approach for single-good auctions. In particular we show that, under our solution concept, there exists a simple normal-form mechanism, which always sells the good, always has non-negative revenue, and guarantees (up to an arbitrarily small, additive constant) a revenue benchmark that is always greater than or equal to the second-highest valuation, and sometimes much greater. By contrast, we also prove that the same benchmark cannot even be approximated within any positive factor, under classical solution concepts.

Department dc:contributor.department

Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2012

Author dc:creator

• Chen, Jing, Ph. D. Massachusetts Institute of Technology

Advisor dc:contributor.advisor

• Silvio Micali.

• Electrical Engineering and Computer Science.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/78444

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/78444